Head to Head Review: Capital Trust (BXMT) & Orchid Island Capital (ORC)

Capital Trust (NYSE: BXMT) and Orchid Island Capital (NYSE:ORC) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, earnings, risk, valuation and dividends.

Profitability

This table compares Capital Trust and Orchid Island Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capital Trust 55.05% 8.76% 2.43%
Orchid Island Capital N/A -3.33% -0.35%

Risk & Volatility

Capital Trust has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500. Comparatively, Orchid Island Capital has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Capital Trust and Orchid Island Capital, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capital Trust 0 3 3 0 2.50
Orchid Island Capital 0 1 0 0 2.00

Capital Trust presently has a consensus target price of $33.50, suggesting a potential upside of 7.51%. Given Capital Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Capital Trust is more favorable than Orchid Island Capital.

Dividends

Capital Trust pays an annual dividend of $2.48 per share and has a dividend yield of 8.0%. Orchid Island Capital pays an annual dividend of $1.68 per share and has a dividend yield of 16.7%. Capital Trust pays out 106.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Orchid Island Capital pays out -2,799.5% of its earnings in the form of a dividend. Capital Trust has increased its dividend for 3 consecutive years. Orchid Island Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

61.3% of Capital Trust shares are held by institutional investors. Comparatively, 23.6% of Orchid Island Capital shares are held by institutional investors. 0.9% of Capital Trust shares are held by company insiders. Comparatively, 0.9% of Orchid Island Capital shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Capital Trust and Orchid Island Capital’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Capital Trust $298.97 million 9.88 $220.95 million $2.33 13.37
Orchid Island Capital $2.97 million 153.22 -$2.72 million ($0.06) -167.39

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

Summary

Capital Trust beats Orchid Island Capital on 13 of the 16 factors compared between the two stocks.

Capital Trust Company Profile

Blackstone Mortgage Trust, Inc. is a holding company. The Company conducts its operations as a real estate investment trust for the United States federal income tax purposes. The Company originates and purchases senior loans collateralized by properties in North America and Europe. The Company’s business is focused on originating or acquiring senior, floating rate mortgage loans that are secured by a first priority mortgage on commercial real estate assets primarily in the office, lodging, retail, residential and industrial sectors. These investments may be in the form of whole loans or may also include pari passu participations within mortgage loans. It directly originates, co-originates and acquires debt instruments in conjunction with acquisitions, refinancings and recapitalizations of commercial real estate. The Company’s manager is BXMT Advisors L.L.C.

Orchid Island Capital Company Profile

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.

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