Critical Contrast: BRT Apartments (NYSE:BRT) versus Orchid Island Capital (NYSE:ORC)

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

Dividends

BRT Apartments pays an annual dividend of $0.88 per share and has a dividend yield of 9.6%. Orchid Island Capital pays an annual dividend of $0.96 per share and has a dividend yield of 36.5%. BRT Apartments pays out 90.7% 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 111.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BRT Apartments has increased its dividend for 2 consecutive years.

Earnings and Valuation

This table compares BRT Apartments and Orchid Island Capital’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BRT Apartments $119.64 million 1.23 $8.07 million $0.97 9.42
Orchid Island Capital $142.32 million 1.20 $24.26 million $0.86 3.06

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for BRT Apartments and Orchid Island Capital, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BRT Apartments 0 1 2 0 2.67
Orchid Island Capital 0 0 0 0 N/A

BRT Apartments presently has a consensus price target of $10.00, suggesting a potential upside of 9.41%. Given BRT Apartments’ higher possible upside, research analysts clearly believe BRT Apartments is more favorable than Orchid Island Capital.

Volatility & Risk

BRT Apartments has a beta of 1.22, meaning that its stock price is 22% more volatile than the S&P 500. Comparatively, Orchid Island Capital has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500.

Institutional & Insider Ownership

33.9% of BRT Apartments shares are owned by institutional investors. Comparatively, 37.3% of Orchid Island Capital shares are owned by institutional investors. 38.7% of BRT Apartments shares are owned by insiders. Comparatively, 0.4% of Orchid Island Capital shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
BRT Apartments 2.15% 0.99% 0.24%
Orchid Island Capital N/A 12.98% 1.28%

Summary

BRT Apartments beats Orchid Island Capital on 10 of the 16 factors compared between the two stocks.

About BRT Apartments

BRT is a real estate investment trust that owns, operates and develops multi-family properties. Interested parties are urged to review the Form 10-Q filed with the Securities and Exchange Commission for the quarter ended December 31, 2018 and the supplemental disclosures regarding the quarter on the investor relations section of the Company's website.

About Orchid Island Capital

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 based in Vero Beach, Florida.

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