Simon Property Group (NYSE:SPG) vs. Orchid Island Capital (NYSE:ORC) Critical Review

Orchid Island Capital (NYSE:ORC) and Simon Property Group (NYSE:SPG) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, valuation, risk and profitability.

Volatility and Risk

Orchid Island Capital has a beta of 1.83, suggesting that its share price is 83% more volatile than the S&P 500. Comparatively, Simon Property Group has a beta of 1.74, suggesting that its share price is 74% more volatile than the S&P 500.

Dividends

Orchid Island Capital pays an annual dividend of $1.44 per share and has a dividend yield of 16.2%. Simon Property Group pays an annual dividend of $8.40 per share and has a dividend yield of 4.6%. Orchid Island Capital pays out 240.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Simon Property Group pays out 115.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Orchid Island Capital and Simon Property Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orchid Island Capital	0	1	1	0	2.50
Simon Property Group	0	6	4	0	2.40

Orchid Island Capital currently has a consensus price target of $9.50, indicating a potential upside of 6.56%. Simon Property Group has a consensus price target of $175.10, indicating a potential downside of 4.76%. Given Orchid Island Capital’s stronger consensus rating and higher possible upside, analysts clearly believe Orchid Island Capital is more favorable than Simon Property Group.

Earnings & Valuation

This table compares Orchid Island Capital and Simon Property Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orchid Island Capital	$177.57 million	4.68	$37.78 million	$0.60	14.86
Simon Property Group	$5.96 billion	10.06	$2.37 billion	$7.26	25.32

Simon Property Group has higher revenue and earnings than Orchid Island Capital. Orchid Island Capital is trading at a lower price-to-earnings ratio than Simon Property Group, indicating that it is currently the more affordable of the two stocks.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Orchid Island Capital	N/A	-2.01%	-0.23%
Simon Property Group	41.49%	74.02%	7.46%

Insider and Institutional Ownership

32.7% of Orchid Island Capital shares are held by institutional investors. Comparatively, 93.0% of Simon Property Group shares are held by institutional investors. 0.6% of Orchid Island Capital shares are held by company insiders. Comparatively, 8.5% of Simon Property Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Simon Property Group beats Orchid Island Capital on 12 of the 16 factors compared between 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 Simon Property Group

Simon Property Group, Inc. (NYSE:SPG) is a self-administered and self-managed real estate investment trust (REIT). Simon Property Group, L.P., or the Operating Partnership, is our majority-owned partnership subsidiary that owns all of our real estate properties and other assets. In this package, the terms Simon, we, our, or the Company refer to Simon Property Group, Inc., the Operating Partnership, and its subsidiaries. We own, develop and manage premier shopping, dining, entertainment and mixed-use destinations, which consist primarily of malls, Premium Outlets, The Mills, and International Properties. At June 30, 2024, we owned or had an interest in 230 properties comprising 183 million square feet in North America, Asia and Europe. We also owned an 84% interest in The Taubman Realty Group, or TRG, which owns 22 regional, super-regional, and outlet malls in the U.S. and Asia. Additionally, at June 30, 2024, we had a 22.4% ownership interest in Klépierre, a publicly traded, Paris-based real estate company, which owns shopping centers in 14 European countries.