ORC
Orchid Island Capital, Inc.
$6.72
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 59.1% below fair value
You pay
$6.72
Bear
$13.58
Fair
$16.42
Bull
$19.25
Bear
$13.58
+102.1%
$0.92 FFO × 18x
Fair
$16.42
+144.3%
$0.92 FFO × 22x
Bull
$19.25
+186.5%
$0.92 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($0.92) × default P/FFO multiple
Implied Market Multiple
7.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (5 analysts)
$7.50
Divergence from AlphaVal
119%
Summary
At $0.92 FFO/share with a 22x default REIT multiple, the base-case value is $16.42 per share. Dividend yield: 6.0%. DDM cross-check: $7.45.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
Dividend yield of 6.0% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $7.45 (55% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $7.50 (from 5 analysts). Our estimate is 119% above the consensus -- consider that gap carefully.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify