NexPoint Real Estate Finance (NYSE:NREF – Get Free Report) and Ladder Capital (NYSE:LADR – Get Free Report) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, earnings, institutional ownership, valuation, dividends and risk.
Volatility and Risk
NexPoint Real Estate Finance has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500. Comparatively, Ladder Capital has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.
Analyst Recommendations
This is a summary of current recommendations for NexPoint Real Estate Finance and Ladder Capital, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| NexPoint Real Estate Finance | 1 | 3 | 0 | 0 | 1.75 |
| Ladder Capital | 1 | 1 | 4 | 0 | 2.50 |
Valuation & Earnings
This table compares NexPoint Real Estate Finance and Ladder Capital”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| NexPoint Real Estate Finance | $151.95 million | 1.53 | $110.28 million | $2.90 | 4.54 |
| Ladder Capital | $390.29 million | 3.23 | $64.18 million | $0.51 | 19.44 |
NexPoint Real Estate Finance has higher earnings, but lower revenue than Ladder Capital. NexPoint Real Estate Finance is trading at a lower price-to-earnings ratio than Ladder Capital, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
67.8% of NexPoint Real Estate Finance shares are held by institutional investors. Comparatively, 62.3% of Ladder Capital shares are held by institutional investors. 55.7% of NexPoint Real Estate Finance shares are held by insiders. Comparatively, 12.0% of Ladder Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Dividends
NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 15.2%. Ladder Capital pays an annual dividend of $0.92 per share and has a dividend yield of 9.3%. NexPoint Real Estate Finance pays out 69.0% of its earnings in the form of a dividend. Ladder Capital pays out 180.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NexPoint Real Estate Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.
Profitability
This table compares NexPoint Real Estate Finance and Ladder Capital’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| NexPoint Real Estate Finance | 122.60% | 15.63% | 1.04% |
| Ladder Capital | 16.44% | 5.89% | 1.88% |
Summary
NexPoint Real Estate Finance beats Ladder Capital on 9 of the 16 factors compared between the two stocks.
About NexPoint Real Estate Finance
NexPoint Real Estate Finance, Inc. operates as a commercial mortgage real estate investment trust in the United States. It focuses on originating, structuring, and investing in first-lien mortgage loans, mezzanine loans, preferred equity, convertible notes, multifamily properties, and common equity investments, as well as multifamily and single-family rental commercial mortgage-backed securities securitizations, multifamily structured credit risk notes, and mortgage-backed securities or target assets. The company has elected to be taxed as a real estate investment trust (REIT) and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. NexPoint Real Estate Finance, Inc. was incorporated in 2019 and is based in Dallas, Texas.
About Ladder Capital
Ladder Capital Corp operates as an internally-managed real estate investment trust in the United States. It operates through three segments: Loans, Securities, and Real Estate. The Loans segment originates conduit first mortgage loans that are secured by cash-flowing commercial real estate; and originates and invests in balance sheet first mortgage loans secured by commercial real estate properties that are undergoing transition, including lease-up, sell-out, and renovation or repositioning. It also invests in note purchase financings, subordinated debt, mezzanine debt, and other structured finance products related to commercial real estate. The Securities segment invests in commercial mortgage-backed securities, U.S. treasury and agency, corporate bonds, and equity securities. The Real Estate segment owns and invests in a portfolio of commercial and residential real estate properties, such as leased properties, office buildings, student housing portfolios, hotels, industrial buildings, shopping center, and condominium units. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2008 and is headquartered in New York, New York.
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