Orchid Island Capital (NYSE:ORC – Get Free Report) and Rand Capital (NASDAQ:RAND – Get Free Report) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, institutional ownership, earnings, dividends, analyst recommendations, valuation and profitability.
Dividends
Orchid Island Capital pays an annual dividend of $1.20 per share and has a dividend yield of 23.6%. Rand Capital pays an annual dividend of $1.16 per share and has a dividend yield of 11.7%. Orchid Island Capital pays out 81.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Rand Capital pays out -2,900.0% of its earnings in the form of a dividend. 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.
Risk & Volatility
Orchid Island Capital has a beta of 1.6, suggesting that its stock price is 60% more volatile than the S&P 500. Comparatively, Rand Capital has a beta of 0.08, suggesting that its stock price is 92% less volatile than the S&P 500.
Profitability
| Net Margins | Return on Equity | Return on Assets | |
| Orchid Island Capital | N/A | 11.87% | 1.35% |
| Rand Capital | -2.67% | 5.47% | 5.23% |
Analyst Ratings
This is a summary of current ratings and price targets for Orchid Island Capital and Rand Capital, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Orchid Island Capital | 1 | 2 | 0 | 0 | 1.67 |
| Rand Capital | 1 | 0 | 0 | 0 | 1.00 |
Orchid Island Capital presently has a consensus price target of $7.50, indicating a potential upside of 47.78%. Given Orchid Island Capital’s stronger consensus rating and higher probable upside, analysts plainly believe Orchid Island Capital is more favorable than Rand Capital.
Earnings and Valuation
This table compares Orchid Island Capital and Rand Capital”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Orchid Island Capital | $414.00 million | 2.45 | $159.03 million | $1.48 | 3.43 |
| Rand Capital | $6.47 million | 4.54 | -$8.04 million | ($0.04) | -247.12 |
Orchid Island Capital has higher revenue and earnings than Rand Capital. Rand 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.
Insider & Institutional Ownership
32.7% of Orchid Island Capital shares are owned by institutional investors. 0.3% of Orchid Island Capital shares are owned by company insiders. Comparatively, 68.2% of Rand Capital shares are owned by company 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.
Summary
Orchid Island Capital beats Rand Capital on 12 of the 16 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 Rand Capital
Rand Capital Corporation is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period up to five years.
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