Ladder Capital (NYSE:LADR – Get Free Report) and NexPoint Real Estate Finance (NYSE:NREF – Get Free Report) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, valuation, earnings, dividends, institutional ownership, risk and analyst recommendations.
Earnings and Valuation
This table compares Ladder Capital and NexPoint Real Estate Finance”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Ladder Capital | $390.29 million | 3.23 | $64.18 million | $0.51 | 19.44 |
| NexPoint Real Estate Finance | $151.95 million | 1.53 | $110.28 million | $2.90 | 4.54 |
Volatility and Risk
Ladder Capital has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, NexPoint Real Estate Finance has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500.
Dividends
Ladder Capital pays an annual dividend of $0.92 per share and has a dividend yield of 9.3%. NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 15.2%. 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 pays out 69.0% of its earnings in the form of a dividend. NexPoint Real Estate Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.
Profitability
This table compares Ladder Capital and NexPoint Real Estate Finance’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Ladder Capital | 16.44% | 5.89% | 1.88% |
| NexPoint Real Estate Finance | 122.60% | 15.63% | 1.04% |
Analyst Recommendations
This is a summary of recent ratings and recommmendations for Ladder Capital and NexPoint Real Estate Finance, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ladder Capital | 1 | 1 | 4 | 0 | 2.50 |
| NexPoint Real Estate Finance | 1 | 3 | 0 | 0 | 1.75 |
Ladder Capital currently has a consensus target price of $12.92, suggesting a potential upside of 30.27%. NexPoint Real Estate Finance has a consensus target price of $14.50, suggesting a potential upside of 10.18%. Given Ladder Capital’s stronger consensus rating and higher possible upside, research analysts clearly believe Ladder Capital is more favorable than NexPoint Real Estate Finance.
Institutional & Insider Ownership
62.3% of Ladder Capital shares are owned by institutional investors. Comparatively, 67.8% of NexPoint Real Estate Finance shares are owned by institutional investors. 12.0% of Ladder Capital shares are owned by company insiders. Comparatively, 55.7% of NexPoint Real Estate Finance shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Summary
NexPoint Real Estate Finance beats Ladder Capital on 9 of the 16 factors compared between the two stocks.
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.
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.
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