Financial Comparison: Orchid Island Capital (NYSE:ORC) and Seven Hills Realty Trust (NASDAQ:SEVN)

Orchid Island Capital (NYSE:ORC) and Seven Hills Realty Trust (NASDAQ:SEVN) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

Insider and Institutional Ownership

32.7% of Orchid Island Capital shares are owned by institutional investors. 0.6% of Orchid Island Capital shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Orchid Island Capital and Seven Hills 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	-6.36%	-0.68%
Seven Hills Realty Trust	N/A	N/A	N/A

Dividends

Orchid Island Capital pays an annual dividend of $1.44 per share and has a dividend yield of 17.6%. Seven Hills Realty Trust pays an annual dividend of $1.05 per share and has a dividend yield of 7.4%. Orchid Island Capital pays out -165.5% of its earnings in the form of a dividend. Seven Hills Realty Trust pays out 72.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Orchid Island Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent ratings for Orchid Island Capital and Seven Hills Realty Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orchid Island Capital	0	1	1	0	2.50
Seven Hills Realty Trust	0	0	3	0	3.00

Orchid Island Capital presently has a consensus target price of $9.50, indicating a potential upside of 16.42%. Seven Hills Realty Trust has a consensus target price of $14.67, indicating a potential upside of 3.65%. Given Orchid Island Capital’s higher probable upside, research analysts clearly believe Orchid Island Capital is more favorable than Seven Hills Realty Trust.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orchid Island Capital	$177.57 million	3.28	-$39.23 million	($0.87)	-9.38
Seven Hills Realty Trust	$33.03 million	N/A	N/A	$1.46	9.70

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

Seven Hills Realty Trust, a real estate investment trust, focuses on originating and investing in first mortgage loans secured by middle market and transitional commercial real estate in the United States. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. The company was formerly known as RMR Mortgage Trust. Seven Hills Realty Trust was incorporated in 2008 and is headquartered in Newton, Massachusetts.