Financial Survey: Postal Realty Trust (NYSE:PSTL) versus Ellington Credit (NYSE:EARN)

Postal Realty Trust (NYSE:PSTL) and Ellington Credit (NYSE:EARN) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, valuation, institutional ownership and dividends.

Profitability

This table compares Postal Realty Trust and Ellington Credit’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Postal Realty Trust	4.93%	1.10%	0.58%
Ellington Credit	N/A	15.19%	2.09%

Institutional & Insider Ownership

57.9% of Postal Realty Trust shares are held by institutional investors. Comparatively, 20.4% of Ellington Credit shares are held by institutional investors. 13.6% of Postal Realty Trust shares are held by company insiders. Comparatively, 2.5% of Ellington Credit shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

Postal Realty Trust has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500. Comparatively, Ellington Credit has a beta of 1.87, meaning that its share price is 87% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Postal Realty Trust and Ellington Credit, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Postal Realty Trust	0	1	1	0	2.50
Ellington Credit	0	2	0	0	2.00

Postal Realty Trust presently has a consensus price target of $15.75, indicating a potential upside of 8.02%. Ellington Credit has a consensus price target of $6.00, indicating a potential downside of 14.22%. Given Postal Realty Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Postal Realty Trust is more favorable than Ellington Credit.

Valuation and Earnings

This table compares Postal Realty Trust and Ellington Credit”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Postal Realty Trust	$68.45 million	4.83	$3.71 million	$0.10	145.80
Ellington Credit	$10.93 million	13.10	$4.56 million	$0.29	24.12

Ellington Credit has lower revenue, but higher earnings than Postal Realty Trust. Ellington Credit is trading at a lower price-to-earnings ratio than Postal Realty Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Postal Realty Trust pays an annual dividend of $0.96 per share and has a dividend yield of 6.6%. Ellington Credit pays an annual dividend of $0.96 per share and has a dividend yield of 13.7%. Postal Realty Trust pays out 960.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ellington Credit pays out 331.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ellington Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.

About Postal Realty Trust

Postal Realty Trust, Inc. (NYSE: PSTL) is an internally managed real estate investment trust that owns properties primarily leased to the United States Postal Service ("USPS"). PSTL is focused on acquiring the network of USPS properties, which provide a critical element of the nation's logistics infrastructure that facilitates cost effective and efficient last-mile delivery solutions. As of December 31, 2023, PSTL owned 1,509 properties (including two properties accounted for as financing leases) located in 49 states and one territory comprising approximately 5.9 million net leasable interior square feet. Subsequent to quarter-end and through February 23, 2024, PSTL closed on eight additional properties comprising approximately 33,000 net leasable interior square feet.

About Ellington Credit

Ellington Credit Company, a real estate investment trust, acquires, invests in, and manages residential mortgage-and real estate-related assets. It acquires and manages residential mortgage-backed securities (RMBS), including agency pools and agency collateralized mortgage obligations (CMOs); and non-agency RMBS, such as non-agency CMOs, such as investment grade and non-investment grade. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. The company was formerly known as Ellington Residential Mortgage REIT and changed its name to Ellington Credit Company in April 2024. Ellington Credit Company was incorporated in 2012 and is based in Old Greenwich, Connecticut.