Centerspace (NYSE:CSR) versus NexPoint Residential Trust (NYSE:NXRT) Critical Review

NexPoint Residential Trust (NYSE:NXRT) and Centerspace (NYSE:CSR) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, valuation, risk, earnings, dividends, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

76.6% of NexPoint Residential Trust shares are held by institutional investors. Comparatively, 79.0% of Centerspace shares are held by institutional investors. 15.4% of NexPoint Residential Trust shares are held by company insiders. Comparatively, 0.4% of Centerspace 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.

Analyst Recommendations

This is a summary of current ratings and target prices for NexPoint Residential Trust and Centerspace, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NexPoint Residential Trust	2	5	0	0	1.71
Centerspace	0	6	2	0	2.25

NexPoint Residential Trust currently has a consensus target price of $37.83, indicating a potential upside of 47.12%. Centerspace has a consensus target price of $69.57, indicating a potential upside of 12.27%. Given NexPoint Residential Trust’s higher probable upside, equities research analysts clearly believe NexPoint Residential Trust is more favorable than Centerspace.

Risk and Volatility

NexPoint Residential Trust has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500. Comparatively, Centerspace has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500.

Profitability

This table compares NexPoint Residential Trust and Centerspace’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NexPoint Residential Trust	-12.74%	-9.52%	-1.72%
Centerspace	6.25%	2.00%	0.86%

Earnings and Valuation

This table compares NexPoint Residential Trust and Centerspace”s 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	2.60	-$32.03 million	($1.27)	-20.25
Centerspace	$273.66 million	3.80	$17.59 million	$1.00	61.97

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

Dividends

NexPoint Residential Trust pays an annual dividend of $2.12 per share and has a dividend yield of 8.2%. Centerspace pays an annual dividend of $3.08 per share and has a dividend yield of 5.0%. NexPoint Residential Trust pays out -166.9% of its earnings in the form of a dividend. Centerspace pays out 308.0% 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 Centerspace has raised its dividend for 2 consecutive years. NexPoint Residential Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Centerspace beats NexPoint Residential Trust on 11 of the 17 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 Centerspace

Centerspace is an owner and operator of apartment communities committed to providing great homes by focusing on integrity and serving others. Founded in 1970, as of September 30, 2023, Centerspace owned interests in 71 apartment communities consisting of 12,785 apartment homes located in Colorado, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. Centerspace was named a Top Workplace for the fourth consecutive year in 2023 by the Minneapolis Star Tribune.