NexPoint Diversified Real Estate Trust (NYSE:NXDT) shareholders should be happy to see the share price up 28% in the last month. But over the last half decade, the stock has not performed well. In fact, the share price is down 60%, which falls well short of the return you could get by buying an index fund.

On a more encouraging note the company has added US$58m to its market cap in just the last 7 days, so let's see if we can determine what's driven the five-year loss for shareholders.

NexPoint Diversified Real Estate Trust isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over five years, NexPoint Diversified Real Estate Trust grew its revenue at 7.7% per year. That's a pretty good rate for a long time period. The share price return isn't so respectable with an annual loss of 10% over the period. It seems probably that the business has failed to live up to initial expectations. A pessimistic market can create opportunities.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on NexPoint Diversified Real Estate Trust's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, NexPoint Diversified Real Estate Trust's TSR for the last 5 years was -43%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

While the broader market gained around 28% in the last year, NexPoint Diversified Real Estate Trust shareholders lost 1.5% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 7% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. It's always interesting to track share price performance over the longer term. But to understand NexPoint Diversified Real Estate Trust better, we need to consider many other factors. Take risks, for example - NexPoint Diversified Real Estate Trust has 4 warning signs (and 3 which don't sit too well with us) we think you should know about.

NexPoint Diversified Real Estate Trust is not the only stock that insiders are buying. For those who like to find lesser know companies this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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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.