Critical Comparison: NexPoint Residential Trust (NYSE:NXRT) versus 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 better stock? We will compare the two businesses based on the strength of their earnings, dividends, risk, profitability, institutional ownership, valuation and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and target prices for NexPoint Residential Trust and American Homes 4 Rent, as provided by MarketBeat.com.

	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	6	10	1	2.71

NexPoint Residential Trust presently has a consensus target price of $20.50, suggesting a potential upside of 16.86%. American Homes 4 Rent has a consensus target price of $35.94, suggesting a potential upside of 10.12%. Given NexPoint Residential Trust’s higher probable upside, equities analysts clearly believe NexPoint Residential Trust is more favorable than American Homes 4 Rent.

Volatility & Risk

NexPoint Residential Trust has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500. Comparatively, American Homes 4 Rent has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.

Institutional and Insider Ownership

76.6% of NexPoint Residential Trust shares are held by institutional investors. Comparatively, 91.9% of American Homes 4 Rent shares are held by institutional investors. 16.6% of NexPoint Residential Trust shares are held by company insiders. Comparatively, 5.7% of American Homes 4 Rent shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

NexPoint Residential Trust pays an annual dividend of $2.12 per share and has a dividend yield of 12.1%. 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 -159.4% of its earnings in the form of a dividend. American Homes 4 Rent pays out 104.8% 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 increased its dividend for 3 consecutive years and American Homes 4 Rent has increased its dividend for 5 consecutive years. NexPoint Residential Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

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	-13.22%	-11.75%	-1.79%
American Homes 4 Rent	25.53%	6.25%	3.63%

Earnings & Valuation

This table compares NexPoint Residential Trust and American Homes 4 Rent”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	1.78	-$32.03 million	($1.33)	-13.19
American Homes 4 Rent	$1.85 billion	6.36	$452.97 million	$1.26	25.90

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.

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.