Orchid Island Capital (NYSE:ORC) vs. Franklin BSP Realty Trust (NYSE:FBRT) Financial Contrast

Orchid Island Capital (NYSE:ORC) and Franklin BSP Realty Trust (NYSE:FBRT) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, risk, institutional ownership, earnings, profitability and analyst recommendations.

Analyst Recommendations

This is a breakdown of current recommendations for Orchid Island Capital and Franklin BSP Realty Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orchid Island Capital	1	2	0	0	1.67
Franklin BSP Realty Trust	0	2	3	0	2.60

Orchid Island Capital currently has a consensus price target of $7.50, suggesting a potential upside of 6.01%. Franklin BSP Realty Trust has a consensus price target of $11.50, suggesting a potential upside of 25.75%. Given Franklin BSP Realty Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Franklin BSP Realty Trust is more favorable than Orchid Island Capital.

Insider and Institutional Ownership

32.7% of Orchid Island Capital shares are held by institutional investors. Comparatively, 59.9% of Franklin BSP Realty Trust shares are held by institutional investors. 0.4% of Orchid Island Capital shares are held by company insiders. Comparatively, 1.4% of Franklin BSP Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Orchid Island Capital pays an annual dividend of $1.44 per share and has a dividend yield of 20.4%. Franklin BSP Realty Trust pays an annual dividend of $0.80 per share and has a dividend yield of 8.7%. Orchid Island Capital pays out 138.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Franklin BSP Realty Trust pays out 125.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Orchid Island Capital has increased 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.

Valuation and Earnings

This table compares Orchid Island Capital and Franklin BSP Realty Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orchid Island Capital	$414.00 million	3.43	$159.03 million	$1.04	6.80
Franklin BSP Realty Trust	$270.07 million	2.61	$82.27 million	$0.64	14.29

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

Profitability

This table compares Orchid Island Capital and Franklin BSP Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Orchid Island Capital	N/A	10.86%	1.29%
Franklin BSP Realty Trust	31.03%	7.22%	1.55%

Risk & Volatility

Orchid Island Capital has a beta of 1.63, meaning that its stock price is 63% more volatile than the S&P 500. Comparatively, Franklin BSP Realty Trust has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500.

Summary

Franklin BSP Realty Trust beats Orchid Island Capital on 9 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 Franklin BSP Realty Trust

Benefit Street Partners operates as a self-managed real estate investment trust (REIT). BSP earns income from investing in a leveraged portfolio of residential mortgage pass-through securities consisting almost exclusively of adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac) (together, the government-sponsored enterprises (GSEs)), or by an agency of the federal government, Government National Mortgage Association (Ginnie Mae). BSP’s investment strategy focuses on managing a portfolio of residential mortgage investments consisting almost exclusively of ARM Agency Securities. As of December 31, 2012, the Company’s securities consisted of Agency Securities classified as available-for-sale and Residential mortgage securities classified as held-to-maturity.