Reviewing Sunrise Realty Trust (NASDAQ:SUNS) and NexPoint Real Estate Finance (NYSE:NREF)

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

Profitability

This table compares NexPoint Real Estate Finance and Sunrise Realty 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%
Sunrise Realty Trust	53.33%	8.25%	4.90%

Volatility and Risk

NexPoint Real Estate Finance has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500. Comparatively, Sunrise Realty Trust has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.

Insider and Institutional Ownership

67.8% of NexPoint Real Estate Finance shares are held by institutional investors. 59.9% of NexPoint Real Estate Finance shares are held by company insiders. Comparatively, 28.5% of Sunrise Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares NexPoint Real Estate Finance and Sunrise Realty Trust”s top-line 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	3.22	$105.10 million	$2.37	6.48
Sunrise Realty Trust	$21.57 million	3.67	$12.14 million	$0.97	6.03

NexPoint Real Estate Finance has higher revenue and earnings than Sunrise Realty Trust. Sunrise Realty 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.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for NexPoint Real Estate Finance and Sunrise Realty Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NexPoint Real Estate Finance	0	4	0	0	2.00
Sunrise Realty Trust	1	3	0	0	1.75

NexPoint Real Estate Finance presently has a consensus target price of $16.25, indicating a potential upside of 5.79%. Sunrise Realty Trust has a consensus target price of $6.50, indicating a potential upside of 11.11%. Given Sunrise Realty Trust’s higher possible upside, analysts clearly believe Sunrise Realty Trust is more favorable than NexPoint Real Estate Finance.

Dividends

NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 13.0%. Sunrise Realty Trust pays an annual dividend of $1.20 per share and has a dividend yield of 20.5%. 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. Sunrise Realty Trust pays out 123.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

NexPoint Real Estate Finance beats Sunrise Realty Trust on 11 of the 15 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 Sunrise Realty Trust

Sunrise Realty Trust, Inc. engages in commercial real estate (CRE) lending business. It focuses on originating CRE debt investments and providing capital to borrowers and sponsors with transitional business plans collateralized by CRE assets. The company intends to create a diversified investment portfolio, targeting investments in senior mortgage loans, mezzanine loans, whole loans, B-notes, CMBS, and debt-like preferred equity securities across CRE asset classes. Sunrise Realty Trust, Inc. was incorporated in 2023 and is based in West Palm Beach, Florida.