What does return on equity mean?

How much profit the company earns on the money shareholders have invested.

How do you interpret return on equity?

Higher is better, but very high ROE can be manufactured by leverage — a thin equity base inflates the ratio. Read it next to debt-to-equity and ROIC to tell genuine returns from balance-sheet engineering.

How does return on equity compare across companies?

Comparable across peers, with the leverage caveat. Negative or near-zero equity makes ROE meaningless, so it is suppressed there.

NexPoint Real Estate Finance NREF Return on equity

Discontinued — last reported Q1 '21

Return on equity at other companies

Blackstone Mortgage TrustBXMT

2.9%—

Arbor Realty TrustABR

4.3%-4.1pp

Starwood Property TrustSTWD

5.4%+0.4pp

KKR Real Estate Finance TrustKREF

-8.2%-10.7pp

FBR

Franklin BSP Realty TrustFBRT

4.9%-0.6pp

ACR

ACRES Commercial RealtyACR

8.5%+3.2pp

Other financials

Income statement

See full

Revenue$16.9M+8.5%

Net income$22.6M-12.8%

EPS (diluted)$0.42-40.0%

Balance sheet

See full

Cash & equivalents$22.6M+17.8%

Total assets$5.2B-3.0%

Cash flow

See full

Operating cash flow$9.4M-41.4%

Valuation

See full

Market cap$275.18M-6.3%

P/E2.3×-1.5×

P/S4×+0.9×

Profitability

See full

Net margin27.4%—

Where this comes from

Calculated from NexPoint Real Estate Finance’s reported figures.

net income/total stockholders equity=58.8%

Based on trailing twelve months.

The official record: NexPoint Real Estate Finance’s 10-Q, filed April 30, 2021, on SEC EDGAR. View the filing →

Questions, answered.

What does return on equity mean?: How much profit the company earns on the money shareholders have invested.
How do you interpret return on equity?: Higher is better, but very high ROE can be manufactured by leverage — a thin equity base inflates the ratio. Read it next to debt-to-equity and ROIC to tell genuine returns from balance-sheet engineering.
How does return on equity compare across companies?: Comparable across peers, with the leverage caveat. Negative or near-zero equity makes ROE meaningless, so it is suppressed there.