Postal Realty Trust (NYSE:PSTL) vs. Ellington Credit (NYSE:EARN) Financial Contrast

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

Profitability

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

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

Volatility & Risk

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

Dividends

Ellington Credit pays an annual dividend of $0.96 per share and has a dividend yield of 13.7%. Postal Realty Trust pays an annual dividend of $0.96 per share and has a dividend yield of 6.6%. 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. 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ellington Credit	$10.93 million	13.17	$4.56 million	$0.29	24.24
Postal Realty Trust	$63.71 million	5.27	$3.71 million	$0.10	145.70

Ellington Credit has higher earnings, but lower revenue 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.

Institutional and Insider Ownership

20.4% of Ellington Credit shares are owned by institutional investors. Comparatively, 57.9% of Postal Realty Trust shares are owned by institutional investors. 2.5% of Ellington Credit shares are owned by insiders. Comparatively, 13.6% of Postal Realty Trust shares are owned by 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.

Analyst Recommendations

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

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

Ellington Credit presently has a consensus target price of $6.00, indicating a potential downside of 14.65%. Postal Realty Trust has a consensus target price of $15.75, indicating a potential upside of 8.10%. Given Postal Realty Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Postal Realty Trust is more favorable than Ellington Credit.

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.

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.