NXRT
NexPoint Residential Trust, Inc.
$27.75
Real Estate Investment Trust
85%
P/FFO × Residential REIT Multiple
Strong
·
Conviction
Undervalued
Trading 72.9% below fair value
You pay
$27.75
Bear
$86.89
Fair
$102.48
Bull
$118.08
Bear
$86.89
+213.1%
$2.51 FFO × 16x
Fair
$102.48
+269.3%
$2.51 FFO × 19x
Bull
$118.08
+325.5%
$2.51 FFO × 22x
Key Value Driver
FFO/share ($2.51) × residential P/FFO multiple
Implied Market Multiple
11.1x
Summary
Our base-case estimate uses P/FFO × Residential REIT Multiple. We then blend that result with the average analyst price target of $26.00 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $102.48 per share.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
Dividend yield of 7.6% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $294.02 (142% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $26.00 (from 10 analysts). Our estimate is 368% above the consensus -- consider that gap carefully.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify