Orchid Island Capital (ORC) Profitability Returns; Premium Valuation Challenges Sustainability Narratives

Orchid Island Capital (ORC) has achieved profitability over the past five years, delivering an average annual earnings growth of 15.6%. Most recently, it turned profitable again with its latest earnings characterized as high quality. However, shares currently trade at a pronounced premium with a Price-To-Sales Ratio of 47.8x, well above the industry average of 4.3x and the peer level of 5x. This may raise questions about the sustainability of this turnaround. For investors, the company’s...