Financial Analysis: NexPoint Real Estate Finance (NYSE:NREF) versus Claros Mortgage Trust (NYSE:CMTG)

NexPoint Real Estate Finance (NYSE:NREFGet Free Report) and Claros Mortgage Trust (NYSE:CMTGGet Free Report) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, risk, analyst recommendations, earnings and institutional ownership.

Earnings and Valuation

This table compares NexPoint Real Estate Finance and Claros Mortgage Trust”s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NexPoint Real Estate Finance $89.95 million 3.57 $105.10 million $2.37 7.19
Claros Mortgage Trust $69.81 million 3.55 -$489.07 million ($3.83) -0.46

NexPoint Real Estate Finance has higher revenue and earnings than Claros Mortgage Trust. Claros Mortgage Trust is trading at a lower price-to-earnings ratio than NexPoint Real Estate Finance, indicating that it is currently the more affordable of the two stocks.

Dividends

NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 11.7%. Claros Mortgage Trust pays an annual dividend of $0.40 per share and has a dividend yield of 22.8%. NexPoint Real Estate Finance pays out 84.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Claros Mortgage Trust pays out -10.4% of its earnings in the form of a dividend. Claros Mortgage Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares NexPoint Real Estate Finance and Claros Mortgage Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NexPoint Real Estate Finance 107.93% 12.72% 0.92%
Claros Mortgage Trust -354.13% -19.70% -6.52%

Institutional and Insider Ownership

67.8% of NexPoint Real Estate Finance shares are held by institutional investors. Comparatively, 89.5% of Claros Mortgage Trust shares are held by institutional investors. 59.9% of NexPoint Real Estate Finance shares are held by company insiders. Comparatively, 2.6% of Claros Mortgage Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

NexPoint Real Estate Finance has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500. Comparatively, Claros Mortgage Trust has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for NexPoint Real Estate Finance and Claros Mortgage Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NexPoint Real Estate Finance 0 4 0 0 2.00
Claros Mortgage Trust 3 1 0 0 1.25

NexPoint Real Estate Finance currently has a consensus target price of $16.75, indicating a potential downside of 1.70%. Claros Mortgage Trust has a consensus target price of $2.22, indicating a potential upside of 26.31%. Given Claros Mortgage Trust’s higher probable upside, analysts plainly believe Claros Mortgage Trust is more favorable than NexPoint Real Estate Finance.

Summary

NexPoint Real Estate Finance beats Claros Mortgage Trust on 10 of the 15 factors compared between the two stocks.

About NexPoint Real Estate Finance

(Get Free Report)

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 Claros Mortgage Trust

(Get Free Report)

Claros Mortgage Trust, Inc. operates as a real estate investment trust. It focuses on originating senior and subordinate loans on transitional commercial real estate assets in the United States. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. The company was incorporated in 2015 and is headquartered in New York, New York.

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