NexPoint Real Estate Finance (NYSE:NREF) Issues Earnings Results, Beats Estimates By $0.12 EPS

Key Points

• NexPoint Real Estate Finance reported quarterly EPS of $0.52, beating estimates of $0.40 by $0.12, but revenue of $9.91 million fell short of the $15.34 million consensus.
• Third-quarter earnings available for distribution were $0.52 per share, and cash available was $0.60, covering the $0.50 dividend 1.2 times. Fourth-quarter guidance is lower, with midpoint estimates of $0.42 in earnings and $0.55 in cash available per share.
• Book value per diluted share declined 5.2% sequentially to $17.63, largely due to unrealized losses as interest rates rose; management said rates have since retraced and may support a fourth-quarter recovery.

NexPoint Real Estate Finance (NYSE:NREF - Get Free Report) posted its quarterly earnings data on Thursday. The company reported $0.52 earnings per share for the quarter, topping the consensus estimate of $0.40 by $0.12, FiscalAI reports. The firm had revenue of $9.91 million for the quarter, compared to analysts' expectations of $15.34 million. NexPoint Real Estate Finance had a net margin of 107.93% and a return on equity of 12.72%.

Here are the key takeaways from NexPoint Real Estate Finance's conference call:

• Third-quarter earnings available for distribution were $0.52 per share and cash available for distribution was $0.60, both above year-earlier levels. The $0.50 dividend was covered 1.2 times by cash available for distribution.
• Fourth-quarter guidance calls for earnings available for distribution of $0.37–$0.47 per share and cash available for distribution of $0.50–$0.60, with respective midpoints of $0.42 and $0.55—below Q3 results.
• Book value per diluted share fell 5.2% sequentially to $17.63, mainly due to unrealized losses on fair-valued positions amid a rapid rise in interest rates. Management said rates have since retraced and expects that to support a Q4 rebound.
• NREF reported $280 million of year-to-date closings from a previously identified $415 million pipeline, with another $160 million committed over the next 12 months. Management said expanded Mizuho financing capacity and expected repayments provide room to pursue new investments.
• Management sees potential to provide supplemental financing to stressed agency multifamily borrowers, saying the strategy could earn high-single-digit returns before leverage and mid-teens returns with back leverage. The program is still being developed, and management acknowledged the opportunity could diminish if capital markets improve quickly.

NexPoint Real Estate Finance Stock Down 6.9%

Shares of NYSE NREF traded down $1.01 during trading hours on Thursday, hitting $13.63. The stock had a trading volume of 157,826 shares, compared to its average volume of 58,532. The firm's 50-day moving average price is $16.04 and its two-hundred day moving average price is $15.41. NexPoint Real Estate Finance has a 52 week low of $12.60 and a 52 week high of $18.43. The company has a market capitalization of $256.98 million, a P/E ratio of 5.75 and a beta of 1.11. The company has a debt-to-equity ratio of 1.79, a quick ratio of 163.94 and a current ratio of 163.94.

NexPoint Real Estate Finance Announces Dividend

The company also recently declared a quarterly dividend, which will be paid on Thursday, December 31st. Investors of record on Tuesday, December 15th will be paid a $0.50 dividend. The ex-dividend date of this dividend is Tuesday, December 15th. This represents a $2.00 annualized dividend and a dividend yield of 14.7%. NexPoint Real Estate Finance's payout ratio is presently 84.39%.

Analysts Set New Price Targets

A number of research analysts have recently weighed in on NREF shares. Keefe, Bruyette & Woods lowered their price target on NexPoint Real Estate Finance from $16.00 to $15.00 and set a "market perform" rating on the stock in a report on Friday, October 9th. Piper Sandler increased their price objective on NexPoint Real Estate Finance from $16.00 to $17.50 and gave the stock a "neutral" rating in a research note on Friday, August 7th. Weiss Ratings restated a "hold (c)" rating on shares of NexPoint Real Estate Finance in a research report on Monday, September 28th. Wall Street Zen cut NexPoint Real Estate Finance from a "hold" rating to a "sell" rating in a research note on Saturday, August 15th. Finally, Zacks Research raised NexPoint Real Estate Finance from a "strong sell" rating to a "hold" rating in a research note on Thursday, September 24th. Four research analysts have rated the stock with a Hold rating. According to MarketBeat, NexPoint Real Estate Finance presently has an average rating of "Hold" and an average target price of $16.25.

About NexPoint Real Estate Finance

NexPoint Real Estate Finance, Inc NYSE: NREF is a real estate finance company organized as a mortgage real estate investment trust. The company focuses on generating income through investments in commercial real estate debt and related credit instruments rather than directly operating properties.

Its investment activities have included transitional mortgage loans, senior and subordinate loans, mezzanine loans, preferred equity investments, and commercial mortgage-backed securities. NexPoint Real Estate Finance has emphasized lending and investment opportunities tied primarily to multifamily and other commercial real estate assets in the United States.

The company was formed in 2015 and became a publicly traded company in 2020.

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