Critical Comparison: NexPoint Residential Trust (NYSE:NXRT) and Highwoods Properties (NYSE:HIW)

Highwoods Properties (NYSE:HIW) and NexPoint Residential Trust (NYSE:NXRT) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, profitability, dividends, institutional ownership, valuation, analyst recommendations and earnings.

Dividends

Highwoods Properties pays an annual dividend of $2.00 per share and has a dividend yield of 7.5%. NexPoint Residential Trust pays an annual dividend of $1.85 per share and has a dividend yield of 4.9%. Highwoods Properties pays out 163.9% 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 65.4% of its earnings in the form of a dividend.

Profitability

This table compares Highwoods Properties and NexPoint Residential Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Highwoods Properties	15.78%	5.44%	2.18%
NexPoint Residential Trust	27.02%	14.82%	3.49%

Institutional and Insider Ownership

96.3% of Highwoods Properties shares are owned by institutional investors. Comparatively, 76.6% of NexPoint Residential Trust shares are owned by institutional investors. 1.8% of Highwoods Properties shares are owned by company insiders. Comparatively, 13.0% of NexPoint Residential Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Highwoods Properties has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500. Comparatively, NexPoint Residential Trust has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Highwoods Properties and NexPoint Residential Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Highwoods Properties	1	5	2	0	2.13
NexPoint Residential Trust	0	4	1	0	2.20

Highwoods Properties presently has a consensus target price of $24.75, suggesting a potential downside of 6.92%. NexPoint Residential Trust has a consensus target price of $37.75, suggesting a potential downside of 0.58%. Given NexPoint Residential Trust’s stronger consensus rating and higher probable upside, analysts clearly believe NexPoint Residential Trust is more favorable than Highwoods Properties.

Earnings and Valuation

This table compares Highwoods Properties 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
Highwoods Properties	$834.00 million	3.38	$148.71 million	$1.22	21.80
NexPoint Residential Trust	$275.88 million	3.53	$44.26 million	$2.83	13.42

Highwoods Properties has higher revenue and earnings than NexPoint Residential Trust. NexPoint Residential Trust is trading at a lower price-to-earnings ratio than Highwoods Properties, indicating that it is currently the more affordable of the two stocks.

Summary

NexPoint Residential Trust beats Highwoods Properties on 10 of the 16 factors compared between the two stocks.

About Highwoods Properties

Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW), fully-integrated office real estate investment trust (REIT) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders.

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.