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Orchid Island Capital (ORC)
NYSE:ORC
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Orchid Island Capital
(NYSE:ORC)
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Rating:63Neutral
Price Target:
$9.00
▲(23.46% Upside)
The score reflects improved recent operating results and cash generation, plus a constructive technical uptrend and very high dividend yield. These positives are tempered by substantial balance-sheet leverage and a history of volatile results, alongside rate/funding-cost sensitivity highlighted in the earnings discussion.
Positive Factors
Free cash flow strength
ORC's TTM free cash flow of roughly $89.7M provides an internal funding source to support monthly distributions, absorb temporary margin compression, and improve liquidity. Sustained positive FCF over several quarters enhances resilience versus reliance on external capital markets.
Agency RMBS focus
A portfolio concentrated in agency RMBS backed by government-sponsored entities reduces credit/default risk versus non-agency holdings. This structural positioning helps stabilize principal and interest cashflows, supports access to repo financing, and aligns risk with a durable mREIT business model.
Capital raising flexibility
An ATM equity distribution agreement for up to $500M gives ORC durable capital flexibility to opportunistically raise equity, shore up book value, de-lever, or fund portfolio growth without disrupting operations. This structural tool reduces refinancing strain over the medium term.
Negative Factors
High leverage
A debt-to-equity ratio near 7.4x leaves ORC highly levered; in an mREIT this magnifies returns but also magnifies stress from spread widening or asset markdowns. Elevated leverage reduces financial flexibility and increases refinancing and solvency risk across adverse market scenarios.
Multi-year earnings volatility
Historical swings into negative revenue and sizable losses show ORC's earnings are cyclically sensitive to rate curves, prepayments, and hedge outcomes. Persistent volatility undermines predictability of dividends and book value, complicating medium-term capital planning and investor confidence.
Funding cost sensitivity
ORC's reliance on short-term repo funding makes net interest margin acutely sensitive to funding-cost changes. Recent rises in repo spreads compress the net interest spread on a highly levered portfolio, increasing earnings and liquidity risk if funding conditions tighten further.
Orchid Island Capital (ORC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.18B
Dividend Yield20.03%
Average Volume (3M)6.18M
Price to Earnings (P/E)6.3
Beta (1Y)0.67
Revenue Growth72.30%
EPS Growth-54.02%
CountryUS
EmployeesN/A
SectorReal Estate
Sector Strength53
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)0.19
Shares Outstanding151,712,160
10 Day Avg. Volume7,072,958
30 Day Avg. Volume6,176,070
Financial Highlights & Ratios
PEG Ratio-0.08
Price to Book (P/B)0.76
Price to Sales (P/S)9.36
P/FCF Ratio7.60
Enterprise Value/Market Cap7.27
Enterprise Value/Revenue51.20
Enterprise Value/Gross Profit53.20
Enterprise Value/Ebitda38.60
Forecast
1Y Price Target
$7.50Price Target Upside2.88% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Orchid Island Capital Business Overview & Revenue Model
Company DescriptionOrchid 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 qualifies as a real estate investment trust for federal income tax purposes. Orchid Island Capital, Inc. was incorporated in 2010 and is based in Vero Beach, Florida.
How the Company Makes MoneyOrchid Island Capital generates revenue primarily through the interest income earned on its mortgage-backed securities portfolio. The company invests in both agency RMBS, which are guaranteed by government-sponsored entities, and non-agency RMBS, which are not backed by any government guarantees. The interest income is supplemented by potential capital appreciation of its securities and gains from trading activities. Additionally, the company may utilize leverage to enhance returns on its investments, borrowing against its securities to increase its investment capacity. Significant partnerships with financial institutions and mortgage servicers may also contribute to its earnings, as these relationships can provide access to a broader range of investment opportunities and market insights.
Orchid Island Capital Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
The call presented a predominately positive operational and financial picture: strong Q4 earnings and EPS growth, significant balance-sheet and portfolio expansion executed when spreads were wide, materially improved expense ratio and funding costs, and disciplined hedging and liquidity management. The management team also acknowledged and is actively managing headwinds — notably elevated prepayment speeds (especially on higher coupons), short-term funding volatility at year-end, and policy/technical uncertainty related to potential GSE activity — which could moderate near-term earnings. On balance the positives (growth, earnings, improved costs, and defensive positioning) outweigh the risks discussed.Q4-2025 Updates
Positive Updates
Strong Quarterly Earnings and EPS Growth
Net income for Q4 was $103.4 million, equating to $0.62 per share versus $0.53 in Q3 (≈+17% QoQ). Total return for the quarter was 7.8% (vs. 6.7% in Q3).
Book Value and Equity Growth
Book value increased to $7.54 at quarter-end from $7.33 at the end of Q3 (+$0.21, ≈+2.9%). Stockholders' equity ended Q4 at approximately $1.4 billion.
Material Portfolio and Balance Sheet Growth
Average MBS holdings rose to $9.5 billion (actual balance $10.6 billion), up from $7.7 billion in Q3 — approximately +27% growth in quarter. Company roughly doubled in size over 2025 (shareholders' equity and total assets +~100% year-over-year).
Disciplined, Well-Timed Acquisitions
Q4 purchases of agency specified pools totaled $3.2 billion (breakdown: $892M Fannie 5s; $1.5B Fannie 5.5s; $600M Fannie 6s; $283M Fannie 6.5s). Over ~2025 they completed $7.4B of acquisitions with ~75% executed when a Morgan Stanley spread index was >100 bps (weighted average spread at time of acquisitions ~108 bps), enhancing long-term return potential.
Improved Funding Costs and Liquidity
Average repo rate declined from 4.33% at the start of the quarter to 3.98% at quarter-end (−35 bps). Liquidity remained high (57.7% at quarter-end vs. 57.1% in Q3) aided by lower haircuts (~4%). Post-quarter SOFR settled in the ~3.63–3.65% range and repo spreads have trended toward ~14 bps, implying an expected repo roll yield around ~3.8% in coming months.
Lower Expense Ratio / Operating Leverage
G&A (including management fee) as a percentage of shareholders' equity ran at ~1.7% for 2025 — materially lower than the >5% peak during the tightening cycle and below the pre-COVID highs. Non-management expenses rose only modestly despite the business doubling in size, improving operating leverage.
Defensive Portfolio Positioning and Hedging
Portfolio duration remained low (≈2.08) and duration gap tightened to ~+0.17 years (from negative earlier), reflecting a shift to higher coupon, lower-duration pools. Hedge notional remained stable; 69% of outstanding repo was hedged (vs. 70% Q3). Net additions to pay-fixed swaps totaled roughly $950M (predominantly 3-year pay-fixed) to protect against downside rate scenarios.
Dividend Coverage and Distribution Policy
Monthly dividend maintained at $0.12 (quarterly $0.36). For 2025 ~95% of dividends were derived from taxable income (≈5% return of capital), indicating the company distributed substantially all taxable income while maintaining the dividend.
Negative Updates
Rising Prepayment Speeds
Prepayment speeds rose to 15.7% in Q4 from 10.1% in Q3 (an increase of ~5.6 percentage points, or roughly +55% relative), driven particularly by higher-coupon pools (6%+). Higher speeds reduced carry and trimmed yields on affected positions.
Short-Term Funding Pressure at Year-End
Repo spreads widened into the low-to-mid 20 bps area approaching year-end, briefly increasing funding costs and pressure before improving post-year-end. This created some near-term funding cost volatility.
Lower Sensitivity to Further Spread Tightening
Strategic shift into production/premium coupons (5%–6.5%) reduced spread duration and interest-rate sensitivity — while defensive, this profile benefits less from additional mortgage spread tightening and has produced modestly lagging relative performance vs. some peers after the January GSE announcement.
Market Technical / Policy Uncertainty
Potential for increased GSE purchases (referenced up to $200B) and uncertainty around Fed actions create ambiguity in future supply/demand dynamics; if supply increases materially, it could pressure mortgage relative performance and delay gains in some coupon segments.
Mortgages Less Attractive vs. Prior Year
Although MBS spreads tightened (current-coupon to 10-year at ~80 bps), mortgage rates available to borrowers remain north of 6%, and overall mortgage market attractiveness is diminished compared with a year ago, limiting upside from additional spread moves without funding/rate support.
Rising DVO1 and Slightly Increased Interest-Rate Sensitivity
DVO1 moved from ~122,000 (12/31) to ~178,000 recently (increase of ~56,000), indicating increased dollar value of a one-basis-point move; while hedged, this is a metric to monitor for rate-shock scenarios.
Potential Earnings Compression if Speeds Accelerate
If prepayment speeds accelerate materially beyond expectations, the company — despite call-protected specified pools and moderate premiums — could see compressed earnings and lower carry, particularly on higher-coupon pools that showed higher near-term CPRs.
Company Guidance
Management guided a defensive-but-constructive outlook: Q4 results included $103.4M net income ($0.62/share), book value $7.54 (up from $7.33), shareholders’ equity ~ $1.4B, Q4 dividend of $0.36 (12¢/month) and total return of 7.8% (vs 6.7% in Q3); the company ended Q4 with average MBS of $9.5B (actual balance $10.6B, ~27% QoQ growth), leverage 7.4%, liquidity 57.7% (vs 57.1% Q3), and prepayment speeds of 15.7% (10.1% Q3). Portfolio & funding guidance: purchases in Q4 totaled $3.2B of specified pools (≈$892M Fannie 5s, $1.5B 5.5s, $600M 6s, $283M 6.5s) at modeled yields in the low-5% range, WA coupon rose to ~5.64, OAS for 5–6.5s tightened to ~50–60 bps, and the firm noted 75% of $7.4B of 2025 acquisitions occurred when spreads averaged ~108 bps; funding costs improved (repo rates fell from 4.33% to 3.98%, SOFR in the mid-3.6s, repo spreads trending to ~14 bps) and the company expects repo funding to turnover around a ~3.8% rate. Risk positioning/guidance: hedges equal ~69% of repo notional, DVO1 rose from 122k at 12/31 to ~178k, portfolio duration is low (~2.08) with a small positive duration gap (~0.17 currently), the firm added ~$950M pay-fixed swaps ($800M 3y, $90M 5y, $75M 7y) and TBA shorts in 5–6.5 coupons, expects prepayment speeds to moderate (improving carry), sees potential for further MBS tightening if GSE activity/technicals persist but is positioned defensively for a bear‑steepening/rate shock, and reiterated a 2025 expense ratio of ~1.7% with continued discipline on G&A.Orchid Island Capital Financial Statement Overview
Summary
Financials show a meaningful TTM rebound in revenue, profitability and positive free cash flow, but results have been volatile over multiple years and the balance sheet remains highly levered (debt-to-equity ~7.37), keeping overall quality in the mid-range.Income Statement
TTM (Trailing-Twelve-Months) results show a sharp rebound with revenue up ~68.8% and solid profitability (net margin ~44.6%). That said, the multi-year pattern is volatile, including periods of negative revenue and sizable losses (notably 2021–2023), which reduces confidence in the durability of earnings despite the recent improvement.54
Neutral
Balance Sheet
Leverage is the key constraint. In TTM (Trailing-Twelve-Months), debt is very high versus equity (debt-to-equity ~7.37) and assets (~$8.0B debt vs. ~$9.1B assets), which is typical for mortgage REITs but still elevates refinancing and market-spread risk. Equity has improved versus 2023–2024 levels, and return on equity is positive in TTM (~6.9%), but the capital structure remains aggressively levered.32
Negative
Cash Flow
Cash generation is currently supportive: TTM (Trailing-Twelve-Months) operating cash flow and free cash flow are positive (~$89.7M) and grew strongly (~91.2%), with free cash flow roughly matching net income (about 1.0x). The main weakness is inconsistency across years (including very low operating cash flow in 2023) and reported coverage ratios that are not consistently meaningful in the dataset (often near zero), limiting visibility into cash-flow stability through cycles.60
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 168.08M | 54.41M | -20.70M | -241.00M | -49.89M | 12.67M |
| Gross Profit | 161.77M | 54.41M | -20.70M | -243.88M | -49.89M | 10.10M |
| EBITDA | 222.99M | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Net Income | 61.17M | 37.66M | -39.23M | -258.45M | -64.76M | 2.13M |
Balance Sheet | ||||||
| Total Assets | 9.14B | 5.72B | 4.26B | 3.87B | 7.07B | 4.06B |
| Cash, Cash Equivalents and Short-Term Investments | 583.96M | 309.33M | 241.03M | 205.65M | 385.14M | 299.51M |
| Total Debt | 8.01B | 0.00 | 0.00 | 0.00 | 0.00 | 3.60B |
| Total Liabilities | 8.05B | 5.05B | 3.80B | 3.43B | 6.30B | 3.64B |
| Stockholders Equity | 1.09B | 668.50M | 469.94M | 438.76M | 768.10M | 415.29M |
Cash Flow | ||||||
| Free Cash Flow | 89.71M | 66.99M | 8.00M | 289.37M | 96.44M | 55.37M |
| Operating Cash Flow | 89.71M | 66.99M | 8.00M | 289.37M | 96.44M | 55.37M |
| Investing Cash Flow | -2.96B | -1.42B | -441.06M | 2.44B | -3.02B | -199.34M |
| Financing Cash Flow | 3.15B | 1.48B | 396.13M | -2.94B | 3.07B | 164.82M |
Orchid Island Capital Technical Analysis
Positive
7.29
Price Trends
7.32
Positive
7.05
Positive
6.64
Positive
Market Momentum
0.24
Positive
53.33
Neutral
37.82
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ORC, the sentiment is Positive. The current price of 7.29 is below the 20-day moving average (MA) of 7.81, below the 50-day MA of 7.32, and above the 200-day MA of 6.64, indicating a neutral trend. The MACD of 0.24 indicates Positive momentum. The RSI at 53.33 is Neutral, neither overbought nor oversold. The STOCH value of 37.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ORC.
Orchid Island Capital Risk Analysis
Orchid Island Capital disclosed 72 risk factors in its most recent earnings report. Orchid Island Capital reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Orchid Island Capital Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
63 Neutral | $1.18B | 6.29 | 15.59% | 20.03% | 72.30% | -54.02% | |
61 Neutral | $985.17M | 11.33 | 6.90% | 14.90% | 5.52% | -47.72% | |
60 Neutral | $1.60B | 9.74 | 9.23% | 11.37% | 70.94% | 2.95% | |
55 Neutral | $1.19B | ― | -9.69% | 14.29% | 22.48% | 50.49% | |
55 Neutral | $1.03B | 11.96 | 6.66% | 12.69% | -15.48% | -36.45% | |
50 Neutral | $1.03B | -30.25 | 2.10% | 11.40% | 9.46% | -111.44% |
* Real Estate Sector Average
ORC
Orchid Island Capital
7.80
1.02
15.04%
CIM
Chimera Investment
12.35
-1.28
-9.38%
EFC
Ellington Financial
12.85
1.72
15.46%
MFA
MFA Financial
9.64
0.34
3.66%
TWO
Two Harbors
11.47
0.46
4.16%
PMT
PennyMac Mortgage
11.83
0.08
0.66%
Orchid Island Capital Corporate Events
DividendsFinancial Disclosures
Orchid Island Capital Declares Monthly Dividend, Sets Earnings Dates
Positive
Jan 7, 2026
On January 7, 2026, Orchid Island Capital declared a monthly cash dividend of $0.12 per share for January 2026, payable on February 26, 2026 to shareholders of record as of January 30, 2026, and indicated it intends to continue making regular monthly distributions in line with REIT requirements, while cautioning that no minimum payout level is assured. The company also scheduled the release of its estimated fourth-quarter 2025 results and RMBS portfolio metrics for January 14, 2026, with full year-end and fourth-quarter 2025 results due January 29, 2026, signaling upcoming visibility into performance and portfolio positioning that will be closely watched by income-focused investors and other stakeholders amid its leveraged agency RMBS strategy.
The most recent analyst rating on (ORC) stock is a Hold with a $7.50 price target. To see the full list of analyst forecasts on Orchid Island Capital stock, see the ORC Stock Forecast page.
Dividends
Orchid Island Capital Declares December 2025 Dividend
Neutral
Dec 10, 2025
On December 9, 2025, Orchid Island Capital announced a monthly cash dividend of $0.12 per share for December 2025, payable on January 29, 2026. The company also provided details of its RMBS portfolio as of November 30, 2025. This announcement reflects Orchid Island Capital’s ongoing commitment to regular monthly distributions to its stockholders, aligning with its status as a real estate investment trust (REIT) that must distribute at least 90% of its taxable income annually.
The most recent analyst rating on (ORC) stock is a Hold with a $8.00 price target. To see the full list of analyst forecasts on Orchid Island Capital stock, see the ORC Stock Forecast page.
Business Operations and StrategyDividends
Orchid Island Capital Announces November 2025 Dividend
Positive
Nov 12, 2025
On November 12, 2025, Orchid Island Capital announced a monthly dividend of $0.12 per share for November 2025, payable on December 30, 2025, to shareholders of record on November 28, 2025. The company also shared details about its RMBS portfolio as of October 31, 2025. This announcement reflects Orchid Island Capital’s ongoing commitment to regular cash distributions, aligning with its status as a real estate investment trust (REIT), which requires it to distribute at least 90% of its taxable income annually. The company’s dividend policy and portfolio updates are significant for stakeholders as they provide insights into its financial health and strategic direction.
The most recent analyst rating on (ORC) stock is a Hold with a $8.00 price target. To see the full list of analyst forecasts on Orchid Island Capital stock, see the ORC Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.