NexPoint Real Estate Finance (NYSE:NREF – Get Free Report) and Adamas Trust (NASDAQ:ADAM – Get Free Report) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, earnings and institutional ownership.
Insider & Institutional Ownership
67.8% of NexPoint Real Estate Finance shares are owned by institutional investors. Comparatively, 54.9% of Adamas Trust shares are owned by institutional investors. 59.9% of NexPoint Real Estate Finance shares are owned by insiders. Comparatively, 2.0% of Adamas Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Analyst Recommendations
This is a breakdown of current recommendations for NexPoint Real Estate Finance and Adamas Trust, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| NexPoint Real Estate Finance | 0 | 4 | 0 | 0 | 2.00 |
| Adamas Trust | 0 | 5 | 1 | 0 | 2.17 |
Earnings & Valuation
This table compares NexPoint Real Estate Finance and Adamas 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 | $157.73 million | 1.89 | $105.10 million | $2.37 | 6.66 |
| Adamas Trust | $407.04 million | 1.72 | $149.05 million | $1.68 | 4.65 |
Adamas Trust has higher revenue and earnings than NexPoint Real Estate Finance. Adamas 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.
Profitability
This table compares NexPoint Real Estate Finance and Adamas 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% |
| Adamas Trust | 29.82% | 14.72% | 1.04% |
Dividends
NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 12.7%. Adamas Trust pays an annual dividend of $1.20 per share and has a dividend yield of 15.4%. 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. Adamas Trust pays out 71.4% of its earnings in the form of a dividend. Adamas Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.
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, Adamas Trust has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500.
Summary
Adamas Trust beats NexPoint Real Estate Finance on 10 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 Adamas Trust
New York Mortgage Trust, Inc. acquires, invests in, finances, and manages mortgage-related single-family and multi-family residential assets in the United States. Its targeted investments include residential loans, second mortgages, and business purpose loans; structured multi-family property investments, such as preferred equity in, and mezzanine loans to owners of multi-family properties, as well as joint venture equity investments in multi-family properties; non-agency residential mortgage-backed securities (RMBS); agency RMBS; commercial mortgage-backed securities (CMBS); and other mortgage, residential housing, and credit-related assets. 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 incorporated in 2003 and is headquartered in New York, New York.
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