Analyzing Postal Realty Trust (NYSE:PSTL) & ARMOUR Residential REIT (NYSE:ARR)

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

Valuation and Earnings

This table compares Postal Realty Trust and ARMOUR Residential REIT”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Postal Realty Trust	$72.01 million	4.23	$3.71 million	$0.08	162.25
ARMOUR Residential REIT	$145.72 million	7.15	-$67.92 million	$2.36	7.92

Postal Realty Trust has higher earnings, but lower revenue than ARMOUR Residential REIT. ARMOUR Residential REIT 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.

Analyst Recommendations

This is a summary of current recommendations for Postal Realty Trust and ARMOUR Residential REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Postal Realty Trust	0	0	1	0	3.00
ARMOUR Residential REIT	0	3	0	0	2.00

Postal Realty Trust presently has a consensus price target of $15.50, indicating a potential upside of 19.41%. ARMOUR Residential REIT has a consensus price target of $20.50, indicating a potential upside of 9.68%. Given Postal Realty Trust’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Postal Realty Trust is more favorable than ARMOUR Residential REIT.

Dividends

Postal Realty Trust pays an annual dividend of $0.96 per share and has a dividend yield of 7.4%. ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 15.4%. Postal Realty Trust pays out 1,200.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ARMOUR Residential REIT pays out 122.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ARMOUR Residential REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Postal Realty Trust and ARMOUR Residential REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Postal Realty Trust	4.55%	1.06%	0.55%
ARMOUR Residential REIT	24.17%	16.76%	1.74%

Volatility and Risk

Postal Realty Trust has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500. Comparatively, ARMOUR Residential REIT has a beta of 1.49, suggesting that its share price is 49% more volatile than the S&P 500.

Institutional and Insider Ownership

57.9% of Postal Realty Trust shares are held by institutional investors. Comparatively, 54.2% of ARMOUR Residential REIT shares are held by institutional investors. 13.6% of Postal Realty Trust shares are held by company insiders. Comparatively, 0.4% of ARMOUR Residential REIT shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

ARMOUR Residential REIT beats Postal Realty Trust on 9 of the 16 factors compared between the two stocks.

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 ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. Its securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans; and unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. 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. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.