Is NexPoint Residential Trust, Inc. overvalued or undervalued?

As of 29 April 2025, the valuation grade for NexPoint Residential Trust, Inc. has moved from expensive to risky, indicating a significant shift in its market perception. The company appears to be overvalued, particularly given its negative P/E ratio of -110.27 and a price-to-book value of 2.26, which suggests that investors are paying a premium for assets that are not generating positive earnings. Additionally, the EV to EBITDA ratio stands at 6.36, which, while not excessively high, does not compensate for the company's current financial struggles.
In comparison to its peers, NexPoint Residential Trust's valuation metrics are concerning. For instance, UMH Properties, Inc. has a P/E ratio of 49.76, and Ellington Financial, Inc. boasts a very attractive EV to EBITDA of 2.46, highlighting the disparity in performance and valuation within the sector. The company's recent stock performance has also lagged behind the S&P 500, with a year-to-date return of -18.47% compared to the S&P's 2.44%. Overall, these factors suggest that NexPoint Residential Trust is not only overvalued but also faces significant challenges moving forward.