ARMOUR Residential REIT (NYSE:ARR) versus Orion Office REIT (NYSE:ONL) Critical Contrast

Orion Office REIT (NYSE:ONL) and ARMOUR Residential REIT (NYSE:ARR) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, analyst recommendations, valuation, dividends and profitability.

Dividends

Orion Office REIT pays an annual dividend of $0.40 per share and has a dividend yield of 9.9%. ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 14.8%. Orion Office REIT pays out -26.0% of its earnings in the form of a dividend. ARMOUR Residential REIT pays out 122.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Orion Office REIT and ARMOUR Residential REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Orion Office REIT	-50.76%	-10.28%	-6.26%
ARMOUR Residential REIT	24.17%	16.76%	1.74%

Analyst Ratings

This is a summary of current ratings and price targets for Orion Office REIT and ARMOUR Residential REIT, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orion Office REIT	0	1	0	0	2.00
ARMOUR Residential REIT	0	3	0	0	2.00

ARMOUR Residential REIT has a consensus target price of $20.50, suggesting a potential upside of 5.51%. Given ARMOUR Residential REIT’s higher possible upside, analysts clearly believe ARMOUR Residential REIT is more favorable than Orion Office REIT.

Insider and Institutional Ownership

79.9% of Orion Office REIT shares are owned by institutional investors. Comparatively, 54.2% of ARMOUR Residential REIT shares are owned by institutional investors. 0.2% of Orion Office REIT shares are owned by company insiders. Comparatively, 0.4% of ARMOUR Residential REIT shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Orion Office REIT and ARMOUR Residential REIT”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orion Office REIT	$170.25 million	1.33	-$57.30 million	($1.54)	-2.63
ARMOUR Residential REIT	$552.90 million	1.96	-$67.92 million	$2.36	8.23

Orion Office REIT has higher earnings, but lower revenue than ARMOUR Residential REIT. Orion Office REIT is trading at a lower price-to-earnings ratio than ARMOUR Residential REIT, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Orion Office REIT has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500. Comparatively, ARMOUR Residential REIT has a beta of 1.49, meaning that its stock price is 49% more volatile than the S&P 500.

Summary

ARMOUR Residential REIT beats Orion Office REIT on 11 of the 14 factors compared between the two stocks.

About Orion Office REIT

Orion Office REIT specializes in the ownership, acquisition and management of a diversified portfolio of mission-critical and corporate headquarters office buildings in high-quality suburban markets across the U.S. The portfolio is leased primarily on a single-tenant net lease basis to creditworthy tenants. The company's team of experienced industry leaders employs a proven, cycle-tested investment evaluation framework which serves as the lens through which capital allocation decisions are made for the current portfolio and future acquisitions.

About ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. Its securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans; and unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.