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Should You Think About Buying NexPoint Residential Trust, Inc. (NYSE:NXRT) Now?

Simply Wall St

NexPoint Residential Trust, Inc. (NYSE:NXRT), which is in the reits business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$52.00 at one point, and dropping to the lows of US$21.69. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether NexPoint Residential Trust's current trading price of US$22.86 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at NexPoint Residential Trust’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for NexPoint Residential Trust

What is NexPoint Residential Trust worth?

Good news, investors! NexPoint Residential Trust is still a bargain right now. According to my valuation, the intrinsic value for the stock is $43.26, but it is currently trading at US$22.86 on the share market, meaning that there is still an opportunity to buy now. However, given that NexPoint Residential Trust’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of NexPoint Residential Trust look like?

NYSE:NXRT Past and Future Earnings April 7th 2020

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of NexPoint Residential Trust, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although NXRT is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to NXRT, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on NXRT for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on NexPoint Residential Trust. You can find everything you need to know about NexPoint Residential Trust in the latest infographic research report. If you are no longer interested in NexPoint Residential Trust, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.