Ellington Credit (NYSE:EARN) versus Postal Realty Trust (NYSE:PSTL) Critical Contrast

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

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%

Earnings and Valuation

This table compares Postal Realty Trust and Ellington Credit”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Postal Realty Trust	$63.71 million	5.32	$3.71 million	$0.10	147.20
Ellington Credit	$10.93 million	12.96	$4.56 million	$0.29	23.86

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.

Risk and Volatility

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Postal Realty Trust and Ellington Credit, as reported by MarketBeat.

	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 currently has a consensus price target of $15.75, suggesting a potential upside of 7.00%. Ellington Credit has a consensus price target of $6.00, suggesting a potential downside of 13.29%. Given Postal Realty Trust’s stronger consensus rating and higher possible upside, equities analysts plainly believe Postal Realty Trust is more favorable than Ellington Credit.

Institutional and Insider Ownership

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

Dividends

Postal Realty Trust pays an annual dividend of $0.96 per share and has a dividend yield of 6.5%. Ellington Credit pays an annual dividend of $0.96 per share and has a dividend yield of 13.9%. 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.