Is NexPoint Real Estate Finance, Inc. overvalued or undervalued?

As of 31 October 2024, the valuation grade for NexPoint Real Estate Finance, Inc. has moved from risky to very attractive. This indicates a significant improvement in its financial standing. The company is currently undervalued, with a P/E ratio of 4, a Price to Book Value of 0.81, and an EV to EBITDA of 1.93, all of which suggest that the stock is trading at a discount compared to its earnings and assets.
In comparison to its peers, NexPoint stands out with a much lower P/E ratio than Orchid Island Capital, Inc. at 21.15 and One Liberty Properties, Inc. at 17.89, both of which are also rated very attractive. Additionally, NexPoint's impressive ROCE of 39.76% and ROE of 18.88% further reinforce its strong operational efficiency. While the stock has underperformed the S&P 500 year-to-date, the current valuation metrics indicate that it presents a compelling investment opportunity.