Financial Survey: Rand Capital (NASDAQ:RAND) versus Orchid Island Capital (NYSE:ORC)

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

Risk & Volatility

Rand Capital has a beta of 0.08, meaning that its share price is 92% less volatile than the S&P 500. Comparatively, Orchid Island Capital has a beta of 1.6, meaning that its share price is 60% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Rand Capital	-2.67%	5.47%	5.23%
Orchid Island Capital	N/A	11.87%	1.35%

Valuation & Earnings

This table compares Rand Capital and Orchid Island Capital”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rand Capital	$6.47 million	4.45	-$8.04 million	($0.04)	-242.12
Orchid Island Capital	$414.00 million	2.45	$159.03 million	$1.48	3.43

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.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rand Capital	1	0	0	0	1.00
Orchid Island Capital	1	2	0	0	1.67

Orchid Island Capital has a consensus target price of $7.50, indicating a potential upside of 47.78%. Given Orchid Island Capital’s stronger consensus rating and higher possible upside, analysts plainly believe Orchid Island Capital is more favorable than Rand Capital.

Institutional & Insider Ownership

32.7% of Orchid Island Capital shares are owned by institutional investors. 68.2% of Rand Capital shares are owned by insiders. Comparatively, 0.3% of Orchid Island Capital shares are owned by 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

Rand Capital pays an annual dividend of $1.16 per share and has a dividend yield of 12.0%. Orchid Island Capital pays an annual dividend of $1.20 per share and has a dividend yield of 23.6%. Rand Capital pays out -2,900.0% of its earnings in the form of a dividend. 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. 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.

Summary

Orchid Island Capital beats Rand Capital on 11 of the 16 factors compared between the two stocks.

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.

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.