Critical Analysis: Orchid Island Capital (NYSE:ORC) and Regency Centers (NASDAQ:REG)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Orchid Island Capital	N/A	-2.01%	-0.23%
Regency Centers	27.78%	5.85%	3.21%

Analyst Recommendations

This is a breakdown of recent ratings for Orchid Island Capital and Regency Centers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orchid Island Capital	0	1	1	0	2.50
Regency Centers	0	3	8	1	2.83

Orchid Island Capital currently has a consensus price target of $9.50, indicating a potential upside of 15.22%. Regency Centers has a consensus price target of $78.08, indicating a potential upside of 8.66%. Given Orchid Island Capital’s higher possible upside, analysts plainly believe Orchid Island Capital is more favorable than Regency Centers.

Earnings and Valuation

This table compares Orchid Island Capital and Regency Centers”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orchid Island Capital	$177.57 million	3.71	$37.78 million	$0.60	13.74
Regency Centers	$1.44 billion	9.05	$364.56 million	$2.13	33.74

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

Insider and Institutional Ownership

32.7% of Orchid Island Capital shares are owned by institutional investors. Comparatively, 96.1% of Regency Centers shares are owned by institutional investors. 0.6% of Orchid Island Capital shares are owned by insiders. Comparatively, 1.0% of Regency Centers shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Orchid Island Capital has a beta of 1.83, indicating that its stock price is 83% more volatile than the S&P 500. Comparatively, Regency Centers has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500.

Dividends

Orchid Island Capital pays an annual dividend of $1.44 per share and has a dividend yield of 17.5%. Regency Centers pays an annual dividend of $2.82 per share and has a dividend yield of 3.9%. Orchid Island Capital pays out 240.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Regency Centers pays out 132.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Regency Centers beats Orchid Island Capital on 14 of the 17 factors compared between the two stocks.

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.

About Regency Centers

Regency Centers is a preeminent national owner, operator, and developer of shopping centers located in suburban trade areas with compelling demographics. Our portfolio includes thriving properties merchandised with highly productive grocers, restaurants, service providers, and best-in-class retailers that connect to their neighborhoods, communities, and customers. Operating as a fully integrated real estate company, Regency Centers is a qualified real estate investment trust (REIT) that is self-administered, self-managed, and an S&P 500 Index member.