Orchid Island Capital Inc.: Earnings Document - MoneyController (ID 788349)

If you’re an investor looking for insights into the Real Estate sector, particularly the REIT—Mortgage industry, then Orchid Island Capital Inc (ORC) is a stock that might have caught your eye. This comprehensive analysis aims to provide you with a deep dive into the company’s financial metrics, profitability, risks, and opportunities. Whether you’re a seasoned investor or a beginner, this SEO-friendly report will help you make an informed decision about investing in ORC stock.

Company Overview

Orchid Island Capital Inc is a prominent player in the Real Estate sector, focusing on REIT—Mortgage. The company is publicly traded on the NYSE under the ticker symbol “ORC.” It is a specialized finance company that operates as a Real Estate Investment Trust (REIT) focusing on the mortgage sector. The company is publicly traded on the New York Stock Exchange (NYSE) under the ticker symbol “ORC.” Orchid Island Capital’s primary business model revolves around investing in residential mortgage-backed securities (RMBS), both Agency and non-Agency, as well as other mortgage-related assets.

History and Formation

Founded in 2010, Orchid Island Capital was established with the aim of capitalizing on investment opportunities within the residential mortgage market. The company has since evolved to become a notable player in the REIT—Mortgage industry, leveraging its expertise in mortgage-backed securities to generate returns for its shareholders.

Business Model

Orchid Island Capital operates by acquiring, investing in, and managing a diversified portfolio of RMBS and other mortgage assets. The company’s investment strategy is primarily focused on Agency RMBS, which are mortgage-backed securities that have the implicit backing of the U.S. government through agencies like Fannie Mae, Freddie Mac, and Ginnie Mae. This provides a level of safety and liquidity to the investments. Additionally, the company also invests in non-Agency RMBS and other mortgage-related assets to diversify its portfolio and enhance returns.

Key Financial Metrics

Valuation Metrics

  • Market Capitalization: A market cap of $441.2 million positions ORC as a mid-cap stock in its industry.
  • Price-to-Earnings (P/E) Ratio: The P/E ratio of 115.58 suggests that the stock may be overvalued compared to industry peers.
  • Price-to-Book (P/B) Ratio: At 0.9952, the P/B ratio indicates that the stock is nearly fairly valued in terms of its book value.
  • Price-to-Sales (P/S) Ratio: A P/S ratio of 57.71 is on the higher side, raising concerns about valuation.

Profitability Metrics

  • Operating Margin: A 2.52% operating margin shows some level of operational efficiency.
  • Profit Margin: A profit margin of 0% indicates no net income relative to revenue.
  • Return on Assets (ROA): A negative ROA of -0.78% suggests inefficiency in using assets to generate earnings.
  • Return on Equity (ROE): A negative ROE of -7.19% indicates poor financial performance.

Liquidity and Debt Metrics

  • Total Assets: The company has a robust asset base of $4.73 billion.
  • Total Liabilities: Liabilities stand at $11.28 million.
  • Long-Term Debt: A manageable long-term debt of $12.87 million.
  • Cash: A cash reserve of $249.34 million provides financial flexibility.

Dividend Metrics

  • Dividend Yield: A high dividend yield of 20.49% is attractive for income investors.
  • Forward Annual Dividend Rate: The forward annual dividend rate is $1.92.

Recent Earnings Performance

The company’s earnings performance has been a roller coaster. The most recent quarter, Q2 2023, saw an actual EPS of -$0.34 against an estimate of -$0.01, resulting in a surprise of -3300%. This follows a trend of significant earnings surprises, making the stock somewhat unpredictable.

Risk Metrics

  • 1-Year Volatility: The stock has a 1-year volatility of 38.01%.
  • 5-Year Volatility: Over a 5-year period, the volatility stands at 47.74%.
  • Maximum Drawdown: The maximum drawdown is -75.77%.
  • Sharpe Ratio: A negative Sharpe ratio of -0.5861 indicates higher risk and lower returns.

SWOT Analysis


  • High dividend yield for income-focused investors.
  • Low long-term debt provides financial stability.
  • Positive operating margin.


  • Overvaluation concerns due to high P/E and P/S ratios.
  • Negative profitability metrics like ROA and ROE.
  • High volatility and negative Sharpe ratio.


  • Large asset base for potential growth.
  • Low P/B ratio could indicate undervaluation.


  • Unsustainable high dividend yield.
  • Sensitivity to interest rate changes.


Orchid Island Capital Inc (ORC) offers a mixed bag for investors. While the high dividend yield is a strong point, the company’s poor profitability and high valuation ratios are red flags. The stock also carries a high level of risk, as indicated by its volatility and negative Sharpe ratio. Therefore, investors should exercise caution and consider these factors carefully before investing in ORC stock.

Disclaimer: This analysis is for informational purposes only and should not be considered as financial advice.

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