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Orchid Projects Loss for Q2: Is RMBS Strategy Backfiring?

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Key Takeaways

  • ORC estimates a Q2 net loss of 29 cents per share, driven by RMBS and derivative losses.
  • Estimated book value per share indicates a decline of 15.9% year over year as of June 30, 2025.
  • ORC expects a 4.7% negative total return on equity, weighed down by unrealized RMBS-related losses.

Orchid Island Capital, Inc. (ORC - Free Report) 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 mREITs

AGNC Investment (AGNC - Free Report) and Annaly Capital Management, Inc. (NLY - Free Report) 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 & Estimates

Over the past three months, ORC shares have gained 18.6% compared with the industry’s growth of 14%.

Price Performance

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From 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 TTM

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The 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 Estimates

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Orchid currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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AGNC Investment Corp. (AGNC) - free report >>

Annaly Capital Management Inc (NLY) - free report >>

Orchid Island Capital, Inc. (ORC) - free report >>

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