AFC Gamma (NASDAQ:AFCG) vs. NexPoint Real Estate Finance (NYSE:NREF) Head-To-Head Analysis

AFC Gamma (NASDAQ:AFCG) and NexPoint Real Estate Finance (NYSE:NREF) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Volatility and Risk

AFC Gamma has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500. Comparatively, NexPoint Real Estate Finance has a beta of 1.12, suggesting that its share price is 12% more volatile than the S&P 500.

Earnings and Valuation

This table compares AFC Gamma and NexPoint Real Estate Finance”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AFC Gamma	$13.70 million	4.89	-$20.67 million	($0.95)	-3.00
NexPoint Real Estate Finance	$89.95 million	3.17	$105.10 million	$2.62	5.83

NexPoint Real Estate Finance has higher revenue and earnings than AFC Gamma. AFC Gamma is trading at a lower price-to-earnings ratio than NexPoint Real Estate Finance, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares AFC Gamma and NexPoint Real Estate Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AFC Gamma	-70.17%	0.99%	0.62%
NexPoint Real Estate Finance	117.74%	13.30%	0.92%

Analyst Recommendations

This is a summary of current ratings and target prices for AFC Gamma and NexPoint Real Estate Finance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AFC Gamma	1	2	0	0	1.67
NexPoint Real Estate Finance	1	3	0	0	1.75

AFC Gamma presently has a consensus target price of $4.50, suggesting a potential upside of 57.89%. NexPoint Real Estate Finance has a consensus target price of $14.00, suggesting a potential downside of 8.32%. Given AFC Gamma’s higher probable upside, analysts clearly believe AFC Gamma is more favorable than NexPoint Real Estate Finance.

Dividends

AFC Gamma pays an annual dividend of $0.20 per share and has a dividend yield of 7.0%. NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 13.1%. AFC Gamma pays out -21.1% of its earnings in the form of a dividend. NexPoint Real Estate Finance pays out 76.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

26.5% of AFC Gamma shares are owned by institutional investors. Comparatively, 67.8% of NexPoint Real Estate Finance shares are owned by institutional investors. 30.7% of AFC Gamma shares are owned by insiders. Comparatively, 54.0% of NexPoint Real Estate Finance shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

NexPoint Real Estate Finance beats AFC Gamma on 12 of the 15 factors compared between the two stocks.

About AFC Gamma

AFC Gamma, Inc. originates, structures, underwrites, and invests in senior secured loans, and other various commercial real estate loans and debt securities for established companies operating in the cannabis industry. It primarily originates loans structured as senior loans secured by real estate, equipment, and licenses and/or other assets of the loan parties to the extent permitted by applicable laws and the regulations governing such loan parties. The company has elected and qualified to be taxed as a real estate investment trust for the United States federal income tax purposes under the Internal Revenue Code of 1986. AFC Gamma, Inc. was incorporated in 2020 and is based in West Palm Beach, Florida.

About NexPoint Real Estate Finance

NexPoint Real Estate Finance, Inc. operates as a commercial mortgage real estate investment trust in the United States. It focuses on originating, structuring, and investing in first-lien mortgage loans, mezzanine loans, preferred equity, convertible notes, multifamily properties, and common equity investments, as well as multifamily and single-family rental commercial mortgage-backed securities securitizations, multifamily structured credit risk notes, and mortgage-backed securities or target assets. The company has elected to be taxed as a real estate investment trust (REIT) and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. NexPoint Real Estate Finance, Inc. was incorporated in 2019 and is based in Dallas, Texas.