Orchid Island Capital (NYSE: ORC) and New York Mortgage Trust (NASDAQ:NYMT) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, earnings, valuation, analyst recommendations, dividends, profitability and risk.

Profitability

This table compares Orchid Island Capital and New York Mortgage Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Orchid Island Capital N/A -3.33% -0.35%
New York Mortgage Trust 19.62% 10.05% 0.71%

Insider and Institutional Ownership

23.6% of Orchid Island Capital shares are owned by institutional investors. Comparatively, 36.1% of New York Mortgage Trust shares are owned by institutional investors. 0.9% of Orchid Island Capital shares are owned by insiders. Comparatively, 1.3% of New York Mortgage Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Orchid Island Capital has a beta of 0.5, indicating that its share price is 50% less volatile than the S&P 500. Comparatively, New York Mortgage Trust has a beta of 1.38, indicating that its share price is 38% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Orchid Island Capital and New York Mortgage Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orchid Island Capital 0 1 0 0 2.00
New York Mortgage Trust 0 3 1 0 2.25

New York Mortgage Trust has a consensus price target of $6.42, indicating a potential upside of 2.50%. Given New York Mortgage Trust’s stronger consensus rating and higher probable upside, analysts clearly believe New York Mortgage Trust is more favorable than Orchid Island Capital.

Dividends

Orchid Island Capital pays an annual dividend of $1.68 per share and has a dividend yield of 17.4%. New York Mortgage Trust pays an annual dividend of $0.80 per share and has a dividend yield of 12.8%. Orchid Island Capital pays out -2,799.5% of its earnings in the form of a dividend. New York Mortgage Trust pays out 156.9% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Orchid Island Capital and New York Mortgage Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Orchid Island Capital $2.97 million 147.50 -$2.72 million ($0.06) -161.14
New York Mortgage Trust $107.14 million 6.54 $57.06 million $0.51 12.27

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

Summary

New York Mortgage Trust beats Orchid Island Capital on 12 of the 15 factors compared between the two stocks.

About Orchid Island Capital

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.

About New York Mortgage Trust

New York Mortgage Trust, Inc. is a real estate investment trust (REIT). The Company is engaged in the business of acquiring, investing in, financing and managing primarily mortgage-related assets and financial assets. The Company’s investment portfolio includes residential mortgage loans, including second mortgages and loans sourced from distressed markets, non-agency residential mortgage-backed securities (RMBS), multi-family commercial mortgage-backed securities, preferred equity and joint venture equity investments in, and mezzanine loans to, owners of multi-family properties, equity and debt securities issued by entities that invest in residential and commercial real estate and agency RMBS. It may acquire and manage various other types of mortgage-related and financial assets, including, without limitation, collateralized mortgage obligations and securities issued by newly originated residential securitizations, including credit sensitive securities from these securitizations.

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