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

As of 31 October 2024, the valuation grade for NexPoint Real Estate Finance, Inc. moved from risky to very attractive. The company appears to be undervalued, supported by a P/E ratio of 4, a price-to-book value of 0.81, and an EV to EBITDA ratio of 1.93. In comparison, CTO Realty Growth, Inc. has a P/E ratio of -61.47, while Invesco Mortgage Capital, Inc. shows a much higher P/E of 12.88, indicating that NexPoint is trading at a significant discount relative to its peers.
Despite its attractive valuation metrics, NexPoint has underperformed against the S&P 500 over multiple periods, with a year-to-date return of -9.56% compared to the index's 12.22%. This trend continues with a 1-year return of -13.84% versus 17.14% for the S&P 500, highlighting a potential disconnect between its valuation and market performance.