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PSTL

Postal Realty Trust NYSE:PSTL Stock Report

Last Price

US$15.15

Market Cap

US$347.5m

7D

-0.2%

1Y

-18.1%

Updated

03 Jul, 2022

Data

Company Financials +
PSTL fundamental analysis
Snowflake Score
Valuation3/6
Future Growth3/6
Past Performance4/6
Financial Health1/6
Dividends2/6

PSTL Stock Overview

Postal Realty Trust, Inc. is an internally managed real estate investment trust that owns and manages over 1,000 properties leased to the USPS.

Postal Realty Trust Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Postal Realty Trust
Historical stock prices
Current Share PriceUS$15.15
52 Week HighUS$20.75
52 Week LowUS$14.14
Beta0.54
1 Month Change-5.43%
3 Month Change-12.02%
1 Year Change-18.11%
3 Year Change-3.93%
5 Year Changen/a
Change since IPO-10.88%

Recent News & Updates

Jun 29

Postal Realty Trust: Growth Strategy Appears Dilutive

An analysis of Postal Realty's growth strategy does not paint a favorable picture for the long-term, dividend-growth-oriented investor. The weighted average rent per square foot has been trending downwards. Property operating expenses and real estate taxes are growing faster than revenues. Postal Realty does not have a long-enough track record. Prudent investors should wait for the numbers to back up the prevailing narrative. Introduction Postal Realty Trust, Inc. (PSTL) boasts a dividend yield of 6.06% and recently increased their dividend for the eleventh consecutive quarter since their IPO in May 2019. They are an internally managed real estate investment trust ("REIT") focused on acquiring properties leased to the United States Postal Service ((USPS)). Having a stable, government-backed tenant with a high retention rate is a key reason an investment in PSTL is a worthwhile consideration. In a sense, PSTL can be viewed as a conduit to government financing. You could invest in the 10-year Treasury directly and earn 3.125%, or invest in a landlord that derives rental income from a government-backed entity and earn substantially more. The USPS pays their bills on time and rarely relocates. The USPS can trace its roots back to 1775, a year before the founding of the U.S. They have the largest physical and logistical infrastructure of any non-military government institution. There are more USPS retail locations in the U.S. than McDonald’s and Starbucks combined. And, their infrastructure is critical to our growing eCommerce needs. Sources: https://about.usps.com/who/profile/, Financesonline.com, Statista There are some risks: the number of retail postal locations have decreased in the past decade; and the use of e-mail and online billing have reduced first-class mail volume. Still, it is hard to imagine a world without the need for the USPS. PSTL’s leadership team is well-seasoned, and sourcing favorable locations and terms that the USPS would consider leasing long-term appears to be within their area of expertise. Source: PSTL 10-K 2021 Fragmented Industry and Growth Strategy PSTL is the largest owner of properties leased to the USPS, with about 5% of market share. The next 20 portfolio owners combine for about 11% of market share. The industry is fragmented and there is potentially a long runway for growth and consolidation which will benefit PSTL. However, expansion could be expensive, since most USPS landlords are single-property landlords, and for PSTL to negotiate acquisitions with individual landlords across the country would be time consuming. Nevertheless, as long as PSTL can tap into debt markets at favorable terms relative to single property landlords, there are potentially accretive deals to be had. And PSTL’s ability to tap into debt markets will be based on operating metrics and management’s ability to execute a well-defined strategy. In 2021, PSTL acquired 239 properties bringing their total investments of real estate properties to 966 as of the end of 2021. For the period ending May 6, 2022, PSTL has acquired 74 more properties. Source: 2021 Annual Report, Q1 2022 Supplemental Is PSTL Stock Cheap? PSTL does not have a long track record, so in forming an opinion of value, the following are potentially relevant: In January 2021, 3.25 million Class A common stock was priced at $15.25 per share in a follow-on offering. In November 2021, 4.25 million Class A common stock was priced at $17 per share in a follow-on offering. Please also take a look at Table 1, which shows the gross real estate less debt per share and the net real estate less debt per share for 2020 and 2021. Table 1: Gross and Net Real Estate (Less Debt) per Share 2020 2021 Gross real estate less debt $ 17.46 $ 18.48 Net real estate less debt $ 15.57 $ 16.96 Average share price $ 14.61 $ 18.40 Source: Author's calculation, PSTL 10-K 2021, Q1 2020 to Q4 2021 Supplemental The share price today appears undervalued, which is not surprising given the current macroeconomic environment. Lease The majority of PSTL’s leases are modified double-net leases, whereby the tenant is responsible for utilities, routine maintenance and reimbursement of property taxes and the landlord is responsible for the insurance, roof and structure. There are some repairs and maintenance that fall on PSTL. Property maintenance-related payroll would also fall on PSTL. The lease term is typically five years, and the current weighted average lease term is four years. This may seem short for a lease, but this is more a reflection of how the USPS does business than anything else. From 2012 to 2018, the historical weighted lease retention rate is 98.8%. In 2021, PSTL collected 100% of the rent due. Peeling back from the surface, there is an issue with the leases that requires further analysis. The leases with the USPS provide for fixed annual rental payments without annual rent escalators. With rental revenues fixed, while property operating expenses are subject to inflation, there will naturally be some margin compression as the lease moves through time. When the lease gets renewed at the end of the term, there is presumably a wider than normal releasing spread. Unfortunately, PSTL only went public in 2019, so we do not have the benefit of getting a clear view of how wide the releasing spread is and if it makes up for the fact that there are no annual escalators during the term of the lease. A related issue worth considering is that the going-in cap rate might not be as attractive as it looks if there is cap rate compression as time goes by. An 8% going-in cap rate is not the best reflection of the actual cap rate for the length of the lease, as an example. From a theoretical point of view, if there are no lease escalators built in, then where exactly would organic annual dividend growth come from? The growth in dividends has to come from somewhere. If there is margin compression because of fixed rental revenues while property operating expenses are subject to inflation, then what growth rate can dividend growth-oriented investors expect? In a general sense, a REIT that has built-in lease escalators of, say, 2% and has some leverage in their capital structure might be able to support a 3% to 4% annual dividend growth rate, for example. The CEO in the recent earnings call explained that the shorter lease term actually helps because PSTL is able to “mark to market” the lease every four or five years. However, there is still a question of whether the mark to market will make up for the four or five years in which rent stays the same and operating expenses fluctuate. And if they are able to secure a releasing spread that makes up for the lost rent escalator then it would probably be “mark to premium-to-market” which would require people at the USPS to agree to such terms. This is not something an analyst can readily accept without a lengthy track record to support the claim. Source: PSTL 10-K 2021, Q1 2020 to Q4 2021 Supplemental, https://postalrealtytrust.com/ Dividends We have a mismatch. There is not a clear theoretical link of how a sustainable annual growth rate in dividends will be achieved. And yet, we have the fact that there has been an increase in dividends for every quarter since the May 2019 IPO. Ultimately, dividends come from AFFO and FFO, which come from NOI, which come from rental revenues. Please look at Table 2, which highlights the weighted average rent per square for the last nine quarters. Table 2: Weighted Average Rent per Square Foot 2020 2021 2022 1st Quarter $ 9.83 $ 8.62 8.34 2nd Quarter $ 9.87 $ 8.75 3rd Quarter $ 9.94 $ 7.92 4th Quarter $ 8.55 $ 8.22 Source: Q1 2020 to Q4 2021 Supplemental Table 2 does not paint a picture of an accretive growth strategy. The weighted average rent per square foot has declined as compared to the previous quarter in all periods presented. There also appears to be a general trend towards a declining weighted average rent per square foot. This is potentially a cause for concern and requires further scrutiny. The point of growth is to derive benefits from scale. As a company grows, the unit costs decrease relative to sales. Let’s us take a look at some year-over-year metrics that could potentially shed some light. Please take a look at Table 3. Table 3: Selected Metrics (in thousands) 2020 2021 YoY Growth Total revenues $ 23,315 $ 38,276 64% Real estate taxes $ 3,095 $ 5,399 74% Property operating expenses $ 1,924 $ 3,987 107% G&A $ 8,230 $ 10,643 29% Shares outstanding 7014 13689 95%

May 18

Postal Realty Got Cheap Again

Postal Realty continues to grow nicely. Its fundamentals are quite steady. As its price dipped, PSTL is once again opportunistically priced.

May 14
Postal Realty Trust, Inc. Just Missed EPS By 50%: Here's What Analysts Think Will Happen Next

Postal Realty Trust, Inc. Just Missed EPS By 50%: Here's What Analysts Think Will Happen Next

Postal Realty Trust, Inc. ( NYSE:PSTL ) shareholders are probably feeling a little disappointed, since its shares fell...

Shareholder Returns

PSTLUS REITsUS Market
7D-0.2%-0.6%-2.5%
1Y-18.1%-8.7%-21.2%

Return vs Industry: PSTL underperformed the US REITs industry which returned -8.7% over the past year.

Return vs Market: PSTL exceeded the US Market which returned -21.2% over the past year.

Price Volatility

Is PSTL's price volatile compared to industry and market?
PSTL volatility
PSTL Average Weekly Movement4.1%
REITs Industry Average Movement4.9%
Market Average Movement8.1%
10% most volatile stocks in US Market16.8%
10% least volatile stocks in US Market3.3%

Stable Share Price: PSTL is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: PSTL's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
201837Andrew Spodekhttps://www.postalrealtytrust.com

Postal Realty Trust, Inc. is an internally managed real estate investment trust that owns and manages over 1,000 properties leased to the USPS. The Company believes it is one of the largest owners and managers of properties leased to the USPS.

Postal Realty Trust Fundamentals Summary

How do Postal Realty Trust's earnings and revenue compare to its market cap?
PSTL fundamental statistics
Market CapUS$347.51m
Earnings (TTM)US$1.81m
Revenue (TTM)US$43.04m

157.6x

P/E Ratio

6.6x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
PSTL income statement (TTM)
RevenueUS$43.04m
Cost of RevenueUS$10.51m
Gross ProfitUS$32.53m
Other ExpensesUS$30.73m
EarningsUS$1.81m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)0.096
Gross Margin75.59%
Net Profit Margin4.20%
Debt/Equity Ratio45.5%

How did PSTL perform over the long term?

See historical performance and comparison

Dividends

6.1%

Current Dividend Yield

277%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is PSTL undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for PSTL?

Other financial metrics that can be useful for relative valuation.

PSTL key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue10.4x
Enterprise Value/EBITDA23.5x
PEG Ratio10.2x

Price to Sales Ratio vs Peers

How does PSTL's PS Ratio compare to its peers?

PSTL PS Ratio vs Peers
The above table shows the PS ratio for PSTL vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average3.1x
CIO City Office REIT
3.3x5.0%US$565.8m
FSP Franklin Street Properties
2.3x-10.3%US$434.3m
ONL Orion Office REIT
5.2x24.1%US$623.4m
OPI Office Properties Income Trust
1.7x0.8%US$988.8m
PSTL Postal Realty Trust
6.6x17.7%US$347.5m

Price-To-Sales vs Peers: PSTL is expensive based on its Price-To-Sales Ratio (6.6x) compared to the peer average (3.1x).


Price to Earnings Ratio vs Industry

How does PSTL's PE Ratio compare vs other companies in the US REITs Industry?

Price-To-Sales vs Industry: PSTL is expensive based on its Price-To-Sales Ratio (6.6x) compared to the US REITs industry average (5.8x)


Price to Sales Ratio vs Fair Ratio

What is PSTL's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

PSTL PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio6.6x
Fair PS Ratio7.5x

Price-To-Sales vs Fair Ratio: PSTL is good value based on its Price-To-Sales Ratio (6.6x) compared to the estimated Fair Price-To-Sales Ratio (7.5x).


Share Price vs Fair Value

What is the Fair Price of PSTL when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: PSTL ($15.15) is trading below our estimate of fair value ($71.07)

Significantly Below Fair Value: PSTL is trading below fair value by more than 20%.


Price to Earnings Growth Ratio

PEG Ratio: PSTL is poor value based on its PEG Ratio (10.2x)


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Future Growth

How is Postal Realty Trust forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


15.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PSTL's forecast earnings growth (15.4% per year) is above the savings rate (1.9%).

Earnings vs Market: PSTL's earnings (15.4% per year) are forecast to grow faster than the US market (13.6% per year).

High Growth Earnings: PSTL's earnings are forecast to grow, but not significantly.

Revenue vs Market: PSTL's revenue (17.7% per year) is forecast to grow faster than the US market (8.2% per year).

High Growth Revenue: PSTL's revenue (17.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if PSTL's Return on Equity is forecast to be high in 3 years time


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Past Performance

How has Postal Realty Trust performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


8.1%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: PSTL has a large one-off gain of $852.0K impacting its March 31 2022 financial results.

Growing Profit Margin: PSTL's current net profit margins (4.2%) are higher than last year (0.02%).


Past Earnings Growth Analysis

Earnings Trend: PSTL has become profitable over the past 5 years, growing earnings by 8.1% per year.

Accelerating Growth: PSTL's earnings growth over the past year (30016.7%) exceeds its 5-year average (8.1% per year).

Earnings vs Industry: PSTL earnings growth over the past year (30016.7%) exceeded the REITs industry 69.5%.


Return on Equity

High ROE: PSTL's Return on Equity (1.2%) is considered low.


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Financial Health

How is Postal Realty Trust's financial position?

Financial Health Score

1/6

Financial Health Score 1/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: PSTL's short term assets ($36.4M) exceed its short term liabilities ($7.0M).

Long Term Liabilities: PSTL's short term assets ($36.4M) do not cover its long term liabilities ($131.8M).


Debt to Equity History and Analysis

Debt Level: PSTL's net debt to equity ratio (42%) is considered high.

Reducing Debt: Insufficient data to determine if PSTL's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: PSTL's debt is not well covered by operating cash flow (15.7%).

Interest Coverage: PSTL's interest payments on its debt are not well covered by EBIT (1.7x coverage).


Balance Sheet


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Dividend

What is Postal Realty Trust current dividend yield, its reliability and sustainability?

Dividend Score

2/6

Dividend Score 2/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Future Dividend Coverage


6.07%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: PSTL's dividend (6.07%) is higher than the bottom 25% of dividend payers in the US market (1.6%).

High Dividend: PSTL's dividend (6.07%) is in the top 25% of dividend payers in the US market (4.25%)


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, PSTL has been paying a dividend for less than 10 years.

Growing Dividend: PSTL's dividend payments have increased, but the company has only paid a dividend for 3 years.


Earnings Payout to Shareholders

Earnings Coverage: With its high payout ratio (277.3%), PSTL's dividend payments are not well covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its high cash payout ratio (109.9%), PSTL's dividend payments are not well covered by cash flows.


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Management

How experienced are the management team and are they aligned to shareholders interests?

1.9yrs

Average management tenure


CEO

Andrew Spodek (46 yo)

no data

Tenure

US$2,395,863

Compensation

Mr. Andrew Spodek serves as the Chief Executive Officer and a Director at Postal Realty Trust, Inc. Mr. Spodek is the Founder and CEO of Nationwide Postal Management, Inc. Mr. Spodek has many years of expe...


CEO Compensation Analysis

Compensation vs Market: Andrew's total compensation ($USD2.40M) is about average for companies of similar size in the US market ($USD2.92M).

Compensation vs Earnings: Andrew's compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: PSTL's management team is not considered experienced ( 1.9 years average tenure), which suggests a new team.


Board Members

Experienced Board: PSTL's board of directors are considered experienced (3.2 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: PSTL insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 43.3%.


Top Shareholders

Company Information

Postal Realty Trust, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Postal Realty Trust, Inc.
  • Ticker: PSTL
  • Exchange: NYSE
  • Founded: 2018
  • Industry: Office REITs
  • Sector: Real Estate
  • Implied Market Cap: US$347.513m
  • Market Cap: US$284.707m
  • Shares outstanding: 22.94m
  • Website: https://www.postalrealtytrust.com

Number of Employees


Location

  • Postal Realty Trust, Inc.
  • 75 Colombia Avenue
  • Cedarhurst
  • New York
  • 11516
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/07/03 00:00
End of Day Share Price2022/07/01 00:00
Earnings2022/03/31
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.