Critical Review: Summit Hotel Properties (NYSE:INN) and Postal Realty Trust (NYSE:PSTL)

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

Valuation and Earnings

This table compares Summit Hotel Properties and Postal Realty Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Summit Hotel Properties	$731.78 million	0.66	$41.02 million	($0.16)	-27.64
Postal Realty Trust	$91.20 million	5.44	$6.60 million	$0.48	39.65

Summit Hotel Properties has higher revenue and earnings than Postal Realty Trust. Summit Hotel Properties 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.

Volatility & Risk

Summit Hotel Properties has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500. Comparatively, Postal Realty Trust has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500.

Profitability

This table compares Summit Hotel Properties and Postal Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Summit Hotel Properties	0.04%	0.02%	0.01%
Postal Realty Trust	15.36%	4.29%	2.06%

Analyst Recommendations

This is a summary of current recommendations and price targets for Summit Hotel Properties and Postal Realty Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Summit Hotel Properties	3	1	1	0	1.60
Postal Realty Trust	0	1	3	0	2.75

Summit Hotel Properties currently has a consensus price target of $5.00, suggesting a potential upside of 13.05%. Postal Realty Trust has a consensus price target of $18.25, suggesting a potential downside of 4.10%. Given Summit Hotel Properties’ higher probable upside, research analysts clearly believe Summit Hotel Properties is more favorable than Postal Realty Trust.

Insider and Institutional Ownership

96.5% of Summit Hotel Properties shares are owned by institutional investors. Comparatively, 57.9% of Postal Realty Trust shares are owned by institutional investors. 3.4% of Summit Hotel Properties shares are owned by insiders. Comparatively, 13.7% of Postal Realty Trust shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Summit Hotel Properties pays an annual dividend of $0.32 per share and has a dividend yield of 7.2%. Postal Realty Trust pays an annual dividend of $0.98 per share and has a dividend yield of 5.1%. Summit Hotel Properties pays out -200.0% of its earnings in the form of a dividend. Postal Realty Trust pays out 204.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Summit Hotel Properties has increased its dividend for 2 consecutive years and Postal Realty Trust has increased its dividend for 3 consecutive years. Summit Hotel Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Postal Realty Trust beats Summit Hotel Properties on 10 of the 17 factors compared between the two stocks.

About Summit Hotel Properties

Summit Hotel Properties, Inc. is a publicly traded real estate investment trust focused on owning premium-branded lodging properties with efficient operating models primarily in the upscale segment of the lodging industry. As of November 1, 2023, the Company’s portfolio consisted of 101 assets, 57 of which are wholly owned, with a total of 15,035 guestrooms located in 24 states.

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.