Postal Realty’s 3Q Sales More Than Double; BMO Sees 22% Upside

Postal Realty Trust’s third-quarter revenues more than doubled to $6.3 million from $3.01 million in the year-ago quarter and exceeded the Street estimates of $5.02 million.

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Meanwhile, its 3Q loss of $0.01 per share was slightly smaller than the loss of $0.03 per share expected by analysts and compared to a loss of $0.06 a year ago. The company’s adjusted funds from operations stood at $0.24 per share in 3Q. (See PSTL stock analysis on TipRanks).

Postal Realty’s (PSTL) rental income increased 13.6% quarter-over-quarter, reflecting the benefits from the acquired properties. The company acquired 123 USPS (United States Postal Service) properties for $27.6 million during the quarter. In addition, it bought USPS properties (comprised of 14 buildings) worth $8 million, subsequent to the end of 3Q.

On Oct. 30, 2020, the company’s board announced a 5% hike in its quarterly dividend to $0.215 per share. The current dividend yield stands at 5.7%. The company said the new dividend will be payable on Nov. 30 to stockholders of record as of Nov. 16.

Following the 3Q results, BMO Capital analyst Frank Lee maintained a Buy rating and a price target of $18 (22.5% upside potential). Lee said that “PSTL is holding up well in the current environment with 3Q coming in ahead of expectations and 100% of its rents collected.” The analyst added that “The roll-up story remains intact, with $36mm of acquisitions in 3Q/Oct ($77mm YTD) and an additional $57mm in later-stage agreements, which puts PSTL on track to meet its FY20 $100mm target.”

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 3 Buys versus only 1 Hold. The average price target stands at $17.13 implying upside potential of about 14% to current levels. Shares are down by about 13.3% year-to-date.