Critical Review: Orchid Island Capital (NYSE:ORC) and AGNC Investment (NASDAQ:AGNCO)

AGNC Investment (NASDAQ:AGNCO) and Orchid Island Capital (NYSE:ORC) are both real estate companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, earnings, risk, dividends, analyst recommendations and profitability.

Dividends

AGNC Investment pays an annual dividend of $1.63 per share and has a dividend yield of 6.5%. Orchid Island Capital pays an annual dividend of $1.44 per share and has a dividend yield of 17.9%. Orchid Island Capital pays out -271.7% of its earnings in the form of a dividend.

Institutional & Insider Ownership

32.7% of Orchid Island Capital shares are held by institutional investors. 0.6% 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.

Analyst Ratings

This is a summary of recent recommendations for AGNC Investment and Orchid Island Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AGNC Investment	0	0	0	0	N/A
Orchid Island Capital	0	1	1	0	2.50

Orchid Island Capital has a consensus target price of $9.50, suggesting a potential upside of 18.38%. Given Orchid Island Capital’s higher probable upside, analysts clearly believe Orchid Island Capital is more favorable than AGNC Investment.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
AGNC Investment	N/A	N/A	N/A
Orchid Island Capital	N/A	-6.36%	-0.68%

Earnings & Valuation

This table compares AGNC Investment and Orchid Island Capital”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AGNC Investment	$514.00 million	N/A	N/A	N/A	N/A
Orchid Island Capital	-$21.38 million	-19.88	-$39.23 million	($0.53)	-15.14

AGNC Investment has higher revenue and earnings than Orchid Island Capital.

Summary

Orchid Island Capital beats AGNC Investment on 6 of the 9 factors compared between the two stocks.

About AGNC Investment

AGNC Investment Corp. provides private capital to housing market in the United States. It invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by the United States government-sponsored enterprise or by the United States government agency. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as American Capital Agency Corp. and changed its name to AGNC Investment Corp. in September 2016. AGNC Investment Corp. was incorporated in 2008 and is headquartered in Bethesda, Maryland.

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 is backed by single-family residential mortgage loans, referred as Agency RMBS. Its portfolio includes traditional pass-through Agency RMBS, such as mortgage pass through certificates and collateralized mortgage obligations; and structured Agency RMBS comprising interest only securities, inverse interest only securities, and principal only securities. The company has elected to be taxed as a real estate investment trust (REIT) for the United States federal income tax purposes. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to stockholders, if it annually distributes dividends equal to at least 90% of its REIT taxable income to its stockholders. Orchid Island Capital, Inc. was incorporated in 2010 and is headquartered in Vero Beach, Florida.