Comparing ARMOUR Residential REIT (NYSE:ARR) and Orion Office REIT (NYSE:ONL)

ARMOUR Residential REIT (NYSE:ARR) and Orion Office REIT (NYSE:ONL) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Insider and Institutional Ownership

54.2% of ARMOUR Residential REIT shares are owned by institutional investors. Comparatively, 79.9% of Orion Office REIT shares are owned by institutional investors. 0.4% of ARMOUR Residential REIT shares are owned by insiders. Comparatively, 0.2% of Orion Office REIT shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

ARMOUR Residential REIT pays an annual dividend of $2.88 per share and has a dividend yield of 14.8%. Orion Office REIT pays an annual dividend of $0.40 per share and has a dividend yield of 10.0%. ARMOUR Residential REIT pays out 122.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Orion Office REIT pays out -26.0% of its earnings in the form of a dividend.

Profitability

This table compares ARMOUR Residential REIT and Orion Office REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARMOUR Residential REIT	24.17%	16.76%	1.74%
Orion Office REIT	-50.76%	-10.28%	-6.26%

Earnings & Valuation

This table compares ARMOUR Residential REIT and Orion Office REIT”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARMOUR Residential REIT	$145.72 million	7.44	-$67.92 million	$2.36	8.24
Orion Office REIT	$170.25 million	1.32	-$57.30 million	($1.54)	-2.61

Orion Office REIT has higher revenue and earnings than ARMOUR Residential REIT. Orion Office REIT is trading at a lower price-to-earnings ratio than ARMOUR Residential REIT, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for ARMOUR Residential REIT and Orion Office REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARMOUR Residential REIT	0	3	0	0	2.00
Orion Office REIT	0	1	0	0	2.00

ARMOUR Residential REIT currently has a consensus target price of $20.50, indicating a potential upside of 5.40%. Given ARMOUR Residential REIT’s higher probable upside, research analysts plainly believe ARMOUR Residential REIT is more favorable than Orion Office REIT.

Risk & Volatility

ARMOUR Residential REIT has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500. Comparatively, Orion Office REIT has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500.

Summary

ARMOUR Residential REIT beats Orion Office REIT on 10 of the 14 factors compared between the two stocks.

About ARMOUR Residential REIT

ARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. Its securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans; and unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.

About Orion Office REIT

Orion Office REIT specializes in the ownership, acquisition and management of a diversified portfolio of mission-critical and corporate headquarters office buildings in high-quality suburban markets across the U.S. The portfolio is leased primarily on a single-tenant net lease basis to creditworthy tenants. The company's team of experienced industry leaders employs a proven, cycle-tested investment evaluation framework which serves as the lens through which capital allocation decisions are made for the current portfolio and future acquisitions.