Comparing BrightSpire Capital (NYSE:BRSP) and Orchid Island Capital (NYSE:ORC)

BrightSpire Capital (NYSE:BRSP) and Orchid Island Capital (NYSE:ORC) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BrightSpire Capital	2	0	5	0	2.43
Orchid Island Capital	1	2	0	0	1.67

BrightSpire Capital presently has a consensus target price of $6.79, suggesting a potential upside of 22.04%. Given BrightSpire Capital’s stronger consensus rating and higher possible upside, equities analysts clearly believe BrightSpire Capital is more favorable than Orchid Island Capital.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
BrightSpire Capital	-26.91%	7.51%	2.16%
Orchid Island Capital	N/A	6.69%	0.79%

Dividends

BrightSpire Capital pays an annual dividend of $0.64 per share and has a dividend yield of 11.5%. Orchid Island Capital pays an annual dividend of $1.44 per share and has a dividend yield of 20.1%. BrightSpire Capital pays out -213.3% of its earnings in the form of a dividend. Orchid Island Capital pays out 293.9% 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 has raised its dividend for 1 consecutive years. Orchid Island Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

56.6% of BrightSpire Capital shares are owned by institutional investors. Comparatively, 32.7% of Orchid Island Capital shares are owned by institutional investors. 2.4% of BrightSpire Capital shares are owned by company insiders. Comparatively, 0.4% of Orchid Island Capital shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

BrightSpire Capital has a beta of 1.58, suggesting that its stock price is 58% more volatile than the S&P 500. Comparatively, Orchid Island Capital has a beta of 1.66, suggesting that its stock price is 66% more volatile than the S&P 500.

Valuation and Earnings

This table compares BrightSpire Capital and Orchid Island Capital”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BrightSpire Capital	$321.12 million	2.25	-$131.98 million	($0.30)	-18.55
Orchid Island Capital	$241.58 million	4.51	$37.66 million	$0.49	14.64

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

Summary

BrightSpire Capital beats Orchid Island Capital on 9 of the 17 factors compared between the two stocks.

About BrightSpire Capital

BrightSpire Capital, Inc. operates as a commercial real estate (CRE) credit real estate investment trust in the United States and Europe. The company operates through Senior and Mezzanine Loans and Preferred Equity; Net Leased and Other Real Estate; and Corporate and Other segments. It focuses on originating, acquiring, financing, and managing a diversified portfolio of CRE debt investments consisting of first mortgage loans, senior loans, debt securities, mezzanine loans, and preferred equity investments, as well as net leased properties. 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 Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.

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.