Orchid Island Capital (NYSE: ORC) and Ladder Capital (NYSE:LADR) are both small-cap financials companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, risk, dividends, analyst recommendations, earnings and valuation.
Earnings and Valuation
This table compares Orchid Island Capital and Ladder Capital’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Orchid Island Capital||$145.96 million||2.72||$2.00 million||$0.03||249.00|
|Ladder Capital||$450.14 million||3.73||$95.27 million||$0.99||15.24|
Ladder Capital has higher revenue and earnings than Orchid Island Capital. Ladder Capital is trading at a lower price-to-earnings ratio than Orchid Island Capital, indicating that it is currently the more affordable of the two stocks.
Orchid Island Capital pays an annual dividend of $1.32 per share and has a dividend yield of 17.7%. Ladder Capital pays an annual dividend of $1.26 per share and has a dividend yield of 8.3%. Orchid Island Capital pays out 4,400.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ladder Capital pays out 127.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This is a breakdown of current ratings and target prices for Orchid Island Capital and Ladder Capital, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Orchid Island Capital||0||0||0||0||N/A|
Ladder Capital has a consensus target price of $16.50, indicating a potential upside of 9.34%. Given Ladder Capital’s higher possible upside, analysts plainly believe Ladder Capital is more favorable than Orchid Island Capital.
This table compares Orchid Island Capital and Ladder Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Orchid Island Capital||N/A||9.77%||1.02%|
Insider & Institutional Ownership
29.1% of Orchid Island Capital shares are owned by institutional investors. Comparatively, 49.7% of Ladder Capital shares are owned by institutional investors. 0.9% of Orchid Island Capital shares are owned by insiders. Comparatively, 12.5% of Ladder Capital shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Volatility and Risk
Orchid Island Capital has a beta of 0.32, indicating that its share price is 68% less volatile than the S&P 500. Comparatively, Ladder Capital has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500.
Ladder Capital beats Orchid Island Capital on 13 of the 15 factors compared between the two stocks.
About Orchid Island Capital
Orchid Island Capital, Inc. is a specialty finance company that invests in residential mortgage-backed securities (RMBS). The Company’s business objective is to provide attractive risk-adjusted total returns to its investors over the long term through a combination of capital appreciation and the payment of regular monthly distributions. Its portfolio consists of two categories of Agency RMBS: pass-through Agency RMBS and structured Agency RMBS. It invests in pass-through securities, which are securities secured by residential real property in which payments of both interest and principal on the securities are generally made monthly. The mortgage loans underlying pass-through certificates are classified into three categories, including fixed-rate mortgages, adjustable-rate mortgages (ARMs) and Hybrid ARMs. It invests in structured Agency RMBS, which include collateralized mortgage obligations, interest only securities, inverse interest only securities and principal only securities.
About Ladder Capital
Ladder Capital Corp is a commercial real estate finance company. The Company’s segments include loans, securities, real estate and corporate/other. The loans segment includes mortgage loan receivables held for investment (balance sheet loans) and mortgage loan receivables held for sale (conduit loans). The securities segment consists of all of its activities related to commercial real estate securities, which include investments in commercial mortgage-backed securities (CMBS) and United States Agency Securities. The real estate segment includes net leased properties, office buildings, a warehouse and condominium units. The Corporate/other segment includes the Company’s investments in joint ventures, other asset management activities and operating expenses. The Company invests primarily in loans, securities and other interests in the United States commercial real estate, with a focus on senior secured assets.
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