Orchid Projects Loss for Q2: Is RMBS Strategy Backfiring?

Orchid Island Capital, Inc. ORC has released its estimated results for the second quarter of 2025.The company estimates a net loss of 29 cents per share for the quarter ending June 30, 2025. This includes an estimated 45 cents per share of net realized and unrealized losses on residential mortgage-backed securities (RMBS) and derivative instruments.As of June 30, 2025, Orchid’s estimated book value per share stood at $7.21, suggesting a 15.9% decline on a year-over-year basis. It disclosed an estimated negative total return on equity of 4.7% as of the same date. Orchid's RMBS portfolio remains its strength, but its structure amplifies exposure to interest rate risk.  While the company’s focus on Agency-backed securities reduces credit risk, it makes the portfolio vulnerable to prepayment risk and interest rate fluctuations.Orchid book value and total return are likely to decline in the second quarter due to net realized and unrealized losses on its RMBS and derivative instruments.  As of June 30, 2025, Orchid reported an estimated RMBS portfolio value of $6.9 million.How ORC Competes With AGNC and NLY Within mREITsAGNC Investment AGNC and Annaly Capital Management, Inc. NLY are among the most closely tracked names in the mREIT industry.AGNC Investment primarily focuses on leveraged investments in Agency RMBS, including residential mortgage pass-through securities and collateralized mortgage obligations. As of March 31, 2025, the company had $70.5 billion RMBS portfolio value. In the first quarter of 2025, AGNC Investment reported a tangible net book value of $8.25 per share, down 1.9% sequentially. The company recorded a positive economic return on equity of 2.4%.Annaly Capital primarily focuses on Agency mortgage-backed securities (MBS), Residential Credit, and Mortgage Servicing Rights. As of March 31, 2025, the company held $75 billion of Agency MBS. It reported a book value per common share of $19.02 for the first quarter of 2025. Annaly Capital recorded an economic return of 3% for the same period.Orchid’s Price Performance, Valuations & EstimatesOver the past three months, ORC shares have gained 18.6% compared with the industry’s growth of 14%.Price PerformanceImage Source: Zacks Investment ResearchFrom a valuation standpoint, Orchid trades at a forward price-to-tangible (P/TB) ratio of 1.03X, above the industry’s average of 1X.Price-to-Tangible Book TTMImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for ORC’s 2025 and 2026 earnings implies a year-over-year rise of 394.4% and 24.5%, respectively. Estimates for 2025 and 2026 have been unchanged over the past 30 days.Earnings EstimatesImage Source: Zacks Investment ResearchOrchid currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Higher. Faster. Sooner. Buy These Stocks NowA small number of stocks are primed for a breakout, and you have a chance to get in before they take off.At any given time, there are only 220 Zacks Rank #1 Strong Buys. On average, this list more than doubles the S&P 500. We’ve combed through the latest Strong Buys and selected 7 compelling companies likely to jump sooner and climb higher than any other stock you could buy this month.You'll learn everything you need to know about these exciting trades in our brand-new Special Report, 7 Best Stocks for the Next 30 Days.Download the report free now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AGNC Investment Corp. (AGNC): Free Stock Analysis Report Annaly Capital Management Inc (NLY): Free Stock Analysis Report Orchid Island Capital, Inc. (ORC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks