Financial Comparison: NexPoint Residential Trust (NYSE:NXRT) & American Homes 4 Rent (NYSE:AMH)

NexPoint Residential Trust (NYSE:NXRT) and American Homes 4 Rent (NYSE:AMH) are both real estate companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, dividends, valuation and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and recommmendations for NexPoint Residential Trust and American Homes 4 Rent, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NexPoint Residential Trust	3	3	0	0	1.50
American Homes 4 Rent	0	7	10	1	2.67

NexPoint Residential Trust presently has a consensus price target of $20.50, indicating a potential upside of 25.87%. American Homes 4 Rent has a consensus price target of $36.53, indicating a potential upside of 11.24%. Given NexPoint Residential Trust’s higher possible upside, equities analysts clearly believe NexPoint Residential Trust is more favorable than American Homes 4 Rent.

Profitability

This table compares NexPoint Residential Trust and American Homes 4 Rent’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NexPoint Residential Trust	-14.59%	-14.29%	-1.98%
American Homes 4 Rent	24.17%	6.07%	3.48%

Institutional & Insider Ownership

76.6% of NexPoint Residential Trust shares are owned by institutional investors. Comparatively, 91.9% of American Homes 4 Rent shares are owned by institutional investors. 16.6% of NexPoint Residential Trust shares are owned by company insiders. Comparatively, 5.7% of American Homes 4 Rent 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.

Dividends

NexPoint Residential Trust pays an annual dividend of $2.12 per share and has a dividend yield of 13.0%. American Homes 4 Rent pays an annual dividend of $1.32 per share and has a dividend yield of 4.0%. NexPoint Residential Trust pays out -144.2% of its earnings in the form of a dividend. American Homes 4 Rent pays out 108.2% 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 Residential Trust has raised its dividend for 3 consecutive years and American Homes 4 Rent has raised its dividend for 5 consecutive years. NexPoint Residential Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares NexPoint Residential Trust and American Homes 4 Rent”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NexPoint Residential Trust	$251.28 million	1.66	-$32.03 million	($1.47)	-11.08
American Homes 4 Rent	$1.85 billion	6.40	$452.97 million	$1.22	26.92

American Homes 4 Rent has higher revenue and earnings than NexPoint Residential Trust. NexPoint Residential Trust is trading at a lower price-to-earnings ratio than American Homes 4 Rent, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

NexPoint Residential Trust has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500. Comparatively, American Homes 4 Rent has a beta of 0.75, indicating that its share price is 25% less volatile than the S&P 500.

Summary

American Homes 4 Rent beats NexPoint Residential Trust on 13 of the 18 factors compared between the two stocks.

About NexPoint Residential Trust

NexPoint Residential Trust is a publicly traded REIT, with its shares listed on the New York Stock Exchange under the symbol “NXRT,” primarily focused on acquiring, owning and operating well-located middle-income multifamily properties with “value-add” potential in large cities and suburban submarkets of large cities, primarily in the Southeastern and Southwestern United States. NXRT is externally advised by NexPoint Real Estate Advisors, L.P., an affiliate of NexPoint Advisors, L.P., an SEC-registered investment advisor, which has extensive real estate experience.

About American Homes 4 Rent

American Homes 4 Rent operates as a real estate investment trust. It engages in the acquisition, renovation, leasing, and operating of single-family homes as rental properties. The company was founded by Bradley Wayne Hughes, Sr. on October 19, 2012 and is headquartered in Las Vegas, NV.