Analyzing Orchid Island Capital (ORC) and Ladder Capital (LADR)

Orchid Island Capital (NYSE: ORC) and Ladder Capital (NYSE:LADR) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, valuation, profitability, institutional ownership, dividends and analyst recommendations.

Analyst Ratings

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This is a summary of recent ratings and recommmendations for Orchid Island Capital and Ladder Capital, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orchid Island Capital 0 0 0 0 N/A
Ladder Capital 0 0 3 1 3.25

Ladder Capital has a consensus target price of $17.33, suggesting a potential upside of 15.40%. Given Ladder Capital’s higher probable upside, analysts clearly believe Ladder Capital is more favorable than Orchid Island Capital.

Profitability

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%
Ladder Capital 20.78% 10.30% 2.47%

Valuation and Earnings

This table compares Orchid Island Capital and Ladder Capital’s revenue, earnings per share (EPS) 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 $0.84 8.89
Ladder Capital $450.14 million 3.71 $95.27 million $1.36 11.04

Ladder Capital has higher revenue and earnings than Orchid Island Capital. Orchid Island Capital is trading at a lower price-to-earnings ratio than Ladder Capital, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Orchid Island Capital has a beta of 0.31, meaning that its stock price is 69% less volatile than the S&P 500. Comparatively, Ladder Capital has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.

Dividends

Orchid Island Capital pays an annual dividend of $1.08 per share and has a dividend yield of 14.5%. Ladder Capital pays an annual dividend of $1.26 per share and has a dividend yield of 8.4%. Orchid Island Capital pays out 128.6% 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 92.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

28.9% of Orchid Island Capital shares are owned by institutional investors. Comparatively, 49.6% of Ladder Capital shares are owned by institutional investors. 0.9% of Orchid Island Capital shares are owned by company insiders. Comparatively, 12.5% of Ladder Capital shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Ladder Capital beats Orchid Island Capital on 15 of the 16 factors compared between the two stocks.

Orchid Island Capital Company Profile

Orchid Island Capital, Inc., a specialty finance company, invests in residential mortgage-backed securities (RMBS) in the United States. The company's RMBS are backed primarily by single-family residential mortgage loans, referred as Agency RMBS. Its portfolio includes traditional pass-through Agency RMBS; and structured Agency RMBS, including collateralized mortgage obligations, interest only securities, inverse interest only securities, and principal only securities. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2010 and is headquartered in Vero Beach, Florida.

Ladder Capital Company Profile

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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