NexPoint Residential Trust (NXRT): Growing Losses Challenge Bullish Valuation Narrative

NexPoint Residential Trust (NXRT) is facing continued challenges on the earnings front, with losses that have deepened at an average rate of 18.3% annually over the past five years. Despite revenue being forecast to grow at a 4% rate each year, which is much slower than the broader US market’s 10.2%, the company is expected to stay unprofitable for at least the next three years and margins have not shown signs of improvement. For investors, the focus turns to whether NXRT’s discounted share price and below-average valuation multiples offer enough upside to balance out these ongoing profitability hurdles.

See our full analysis for NexPoint Residential Trust.

Now, let’s see how these results stack up against the broader market narratives that shape the outlook for NXRT and its future direction.

See what the community is saying about NexPoint Residential TrustNYSE:NXRT Revenue & Expenses Breakdown as at Oct 2025

Margins Struggle to Recover

Net profit margin has stayed negative and showed no sign of improvement over the last year, standing at -19.5% and forecast to remain in the red for at least three more years. According to the analysts' consensus view, persistent headwinds such as rising costs and regional oversupply challenge margin expansion. This is particularly evident in Sun Belt markets, where new supply and competition have led to occupancy declines and negative lease rate pressure.

Ongoing elevated capital expenditures on essential maintenance could continue eroding profitability, putting pressure on net margins and limiting funds available for growth or dividends. The slow normalization of expense growth and only temporary savings on insurance mean that margin risks may persist despite recent operational improvements.

Growth Lags Market Leaders

Projected annual revenue growth for NXRT is 4%, which is well below the broader US market’s expected 10.2% per year. Analysts' consensus notes that, while housing shortages and robust rental demand in the Sun Belt should offer some support, the risk of oversupply and localized market slowdowns could keep NXRT’s growth capped below peers.

Demographic and affordability trends are keeping demand steady for Class B properties. However, regional risks and slower rent growth in several core markets are expected to constrain meaningful revenue expansion. Population growth and delayed homebuying contribute to occupancy stability. Increased competition and supply may offset these benefits through concessions and flattening lease rates.

Valuation Discount Despite Weak Fundamentals

NXRT currently trades at $30.21 per share, below both its $34.67 analyst consensus price target and the DCF fair value of $52.40, with a Price-To-Sales Ratio of 3x. This is under the industry average of 4.9x for North American residential REITs. As highlighted in the analysts' consensus narrative, this discount is attracting some value-focused investors, but the close gap between the current share price and analyst target signals that the market is not pricing in a major recovery.

At current levels, the stock offers relative value, but analysts remain divided on whether improving fundamentals or ongoing risks will matter more for long-term gains. With earnings expected to stay negative and limited upside in the price target, most analysts see NXRT as fairly valued rather than a clear opportunity.

See what bulls and bears agree on in the full consensus narrative for NexPoint Residential Trust 📊 Read the full NexPoint Residential Trust Consensus Narrative.

Story Continues

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for NexPoint Residential Trust on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your NexPoint Residential Trust research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

See What Else Is Out There

NexPoint Residential Trust’s persistent losses, weak margin recovery, and muted growth stand in stark contrast to steady performers in the sector.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NXRT.

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