NexPoint Residential Trust (NYSE:NXRT) versus American Homes 4 Rent (NYSE:AMH) Critical Contrast
by Teresa Graham · The Cerbat GemAmerican Homes 4 Rent (NYSE:AMH – Get Free Report) and NexPoint Residential Trust (NYSE:NXRT – Get Free Report) are both real estate companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, dividends, earnings, valuation and risk.
Analyst Recommendations
This is a breakdown of current recommendations and price targets for American Homes 4 Rent and NexPoint Residential Trust, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American Homes 4 Rent | 0 | 6 | 10 | 1 | 2.71 |
| NexPoint Residential Trust | 3 | 3 | 0 | 0 | 1.50 |
American Homes 4 Rent currently has a consensus price target of $35.94, indicating a potential upside of 10.12%. NexPoint Residential Trust has a consensus price target of $20.50, indicating a potential upside of 16.86%. Given NexPoint Residential Trust’s higher possible upside, analysts plainly believe NexPoint Residential Trust is more favorable than American Homes 4 Rent.
Institutional and Insider Ownership
91.9% of American Homes 4 Rent shares are held by institutional investors. Comparatively, 76.6% of NexPoint Residential Trust shares are held by institutional investors. 5.7% of American Homes 4 Rent shares are held by insiders. Comparatively, 16.6% of NexPoint Residential Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Earnings and Valuation
This table compares American Homes 4 Rent and NexPoint Residential Trust”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| American Homes 4 Rent | $1.85 billion | 6.36 | $452.97 million | $1.26 | 25.90 |
| NexPoint Residential Trust | $251.28 million | 1.78 | -$32.03 million | ($1.33) | -13.19 |
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.
Profitability
This table compares American Homes 4 Rent and NexPoint Residential Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| American Homes 4 Rent | 25.53% | 6.25% | 3.63% |
| NexPoint Residential Trust | -13.22% | -11.75% | -1.79% |
Dividends
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 an annual dividend of $2.12 per share and has a dividend yield of 12.1%. 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 pays out -159.4% of its earnings in the form of a dividend. American Homes 4 Rent has increased its dividend for 5 consecutive years and NexPoint Residential Trust has increased its dividend for 3 consecutive years. NexPoint Residential Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.
Volatility and Risk
American Homes 4 Rent has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500. Comparatively, NexPoint Residential Trust has a beta of 1.15, meaning that its share price is 15% more 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 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.
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.