NexPoint Residential Trust, Inc. (NYSE: NXRT)

Sector: Real Estate Industry: REIT - Residential CIK: 0001620393
Market Cap 646.05 Mn
P/B 3.67
P/E -41.41
P/S 14.97
ROIC (Qtr) 1.92
Div Yield % 1.75
Rev 1y % (Qtr) -1.98
Total Debt (Qtr) 1.47 Bn
Debt/Equity (Qtr) 4.55
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About

NexPoint Residential Trust, Inc. (NXRT) operates in the real estate sector as a REIT, specializing in value-add multifamily investments in the Southeastern and Southwestern United States. The company's primary business activities revolve around the acquisition, renovation, and management of multifamily properties, which are primarily Class B properties acquired at a discount to replacement cost. NXRT's operations span across various major metropolitan areas in the Southeastern and Southwestern United States. NXRT generates revenue through the ownership...

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Investment thesis

Bull case

  • Strong operating cash flow of 83.93M provides 2.41x coverage of SG&A expenses 34.83M, showing efficient operational cost management.
  • Operating cash flow of 83.93M provides strong 4.90x coverage of tax liabilities 17.14M, showing excellent fiscal position.
  • Cash reserves of 50.11M provide comfortable 2.92x coverage of tax obligations 17.14M, showing strong fiscal management.
  • Strong free cash flow of 43.35M provides 1.24x coverage of SG&A expenses 34.83M, indicating efficient cost management.
  • Operating cash flow of 83.93M exceeds receivables of 11.24M by 7.46x, demonstrating excellent collection efficiency.

Bear case

  • Operating cash flow of 83.93M barely covers its investment activities of (14.66M), with a coverage ratio of -5.72, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 83.93M provides thin coverage of dividend payments of (53.05M) with a -1.58 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 11.87M show weak coverage of depreciation charges of 96.58M, with a 0.12 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 43.35M represents just -4.37x of debt issuance (9.92M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • High depreciation of 96.58M relative to operating cash flow of 83.93M, which is 1.15x suggests significant maintenance capital requirements affecting free cash flow.

Peer comparison

Companies in the REIT - Residential
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 AVB Avalonbay Communities Inc 25.27 Bn 22.07 8.58 8.89 Bn
2 EQR Equity Residential 23.37 Bn 35.27 9.14 8.48 Bn
3 ESS Essex Property Trust, Inc. 16.67 Bn 38.92 11.59 6.71 Bn
4 INVH Invitation Homes Inc. 15.35 Bn 75.39 8.31 8.23 Bn
5 UDR UDR, Inc. 12.52 Bn 86.36 7.35 6.00 Bn
6 CPT Camden Property Trust 11.77 Bn 30.61 7.33 3.90 Bn
7 AMH American Homes 4 Rent 11.56 Bn 32.81 6.89 4.84 Bn
8 ELS Equity Lifestyle Properties Inc 7.52 Bn 221.14 14.94 3.28 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.12 1.01
EV to Cash from Ops. EV/CFO 205.02 38.92
EV to Debt EV to Debt 1.41 2.12
EV to EBIT EV/EBIT -247.94 24.73
EV to EBITDA EV/EBITDA 181.33 14.58
EV to Free Cash Flow [EV/FCF] EV/FCF -3.51 15.85
EV to Market Cap EV to Market Cap 3.20 3.31
EV to Revenue EV/Rev 47.85 12.96
Price to Book Value [P/B] P/B 3.67 3.15
Price to Earnings [P/E] P/E -41.41 38.50
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -0.92 0.46
Dividend Payout Ratio % Div Payout % (Qtr) -106.20 127.44
Dividend per Basic Share Div per Share (Qtr) 2.04 2.77
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 119.37 -64.81
Interest Coverage Int. cover (Qtr) 0.20 2.42
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 5.38 5.70
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -17.47 68.58
Dividend Growth (1y) % Div 1y % (Qtr) 10.27 5.13
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -88.97 12.94
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -36.39 2.63
EBIT Growth (1y) % EBIT 1y % (Qtr) -88.97 17.68
EBT Growth (1y) % EBT 1y % (Qtr) -204.87 37.07
EPS Growth (1y) % EPS 1y % (Qtr) -206.67 9.16
FCF Growth (1y) % FCF 1y % (Qtr) 10.91 -21.42
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -2.59 4.97
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.14 0.14
Cash Payout Ratio Cash Payout (Qtr) 0.43 0.34
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 4.55 -0.46
Interest Cover Ratio Int Coverage (Qtr) 0.20 2.42
Times Interest Earned Times Interest Earned (Qtr) 0.20 2.42
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 42.90 64.69
EBIT Margin % EBIT Margin % (Qtr) 4.69 34.32
EBT Margin % EBT Margin % (Qtr) -19.23 18.10
Gross Margin % Gross Margin % (Qtr) 66.80 54.43
Net Profit Margin % Net Margin % (Qtr) -19.20 16.66