ORC
Orchid Island Capital, Inc.
$6.82
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 58.0% below fair value
You pay
$6.82
Bear
$13.44
Fair
$16.25
Bull
$19.07
Bear
$13.44
+97.1%
$1.05 FFO × 18x
Fair
$16.25
+138.3%
$1.05 FFO × 22x
Bull
$19.07
+179.7%
$1.05 FFO × 26x
Key Value Driver
FFO/share ($1.05) × default P/FFO multiple
Implied Market Multiple
6.5x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $7.50 from 5 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $16.25 per share.
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 5.9% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $7.45 (60% 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 146% 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