Orchid Island Capital (NYSE: ORC) and Cherry Hill Mortgage Investment Corporation (NYSE:CHMI) are both small-cap mortgage reits companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, institutional ownership, valuation, risk and dividends.

Valuation and Earnings

This table compares Orchid Island Capital and Cherry Hill Mortgage Investment Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Orchid Island Capital $87.12 million 5.17 $1.96 million ($0.57) -17.11
Cherry Hill Mortgage Investment Corporation $30.72 million 7.44 $24.83 million $6.73 2.67

Cherry Hill Mortgage Investment Corporation has higher revenue, but lower earnings than Orchid Island Capital. Orchid Island Capital is trading at a lower price-to-earnings ratio than Cherry Hill Mortgage Investment Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

Orchid Island Capital pays an annual dividend of $1.68 per share and has a dividend yield of 17.2%. Cherry Hill Mortgage Investment Corporation pays an annual dividend of $1.96 per share and has a dividend yield of 10.9%. Orchid Island Capital pays out -294.7% of its earnings in the form of a dividend. Cherry Hill Mortgage Investment Corporation pays out 29.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Orchid Island Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Orchid Island Capital and Cherry Hill Mortgage Investment Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orchid Island Capital 0 1 0 0 2.00
Cherry Hill Mortgage Investment Corporation 0 1 3 0 2.75

Cherry Hill Mortgage Investment Corporation has a consensus price target of $19.25, suggesting a potential upside of 7.06%. Given Cherry Hill Mortgage Investment Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Cherry Hill Mortgage Investment Corporation is more favorable than Orchid Island Capital.

Risk and Volatility

Orchid Island Capital has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500. Comparatively, Cherry Hill Mortgage Investment Corporation has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500.

Insider and Institutional Ownership

23.5% of Orchid Island Capital shares are held by institutional investors. Comparatively, 62.4% of Cherry Hill Mortgage Investment Corporation shares are held by institutional investors. 0.9% of Orchid Island Capital shares are held by company insiders. Comparatively, 8.9% of Cherry Hill Mortgage Investment Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Orchid Island Capital and Cherry Hill Mortgage Investment Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Orchid Island Capital N/A -1.10% -0.11%
Cherry Hill Mortgage Investment Corporation 136.70% 9.49% 1.58%

Summary

Cherry Hill Mortgage Investment Corporation beats Orchid Island Capital on 11 of the 15 factors compared between the two stocks.

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.

Cherry Hill Mortgage Investment Corporation Company Profile

Cherry Hill Mortgage Investment Corporation is a residential real estate finance company. The Company is focused on acquiring, investing in and managing residential mortgage assets in the United States. Its principal objective is to generate attractive current yields and risk-adjusted total returns for its stockholders over the long term, primarily through dividend distributions and secondarily through capital appreciation. The Company focuses on attaining this objective, subject to market conditions and availability and terms of financing, by selectively constructing and managing a targeted portfolio of Servicing Related Assets, residential mortgage-backed securities (RMBS), prime mortgage loans and other cashflowing residential mortgage assets. The Company operates its business through segments, including investments in RMBS; investments in Servicing Related Assets, and All Other. The Company is externally managed by Cherry Hill Mortgage Management, LLC.

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