Orchid Island Capital, Inc. (NYSE:ORC) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Orchid Island Capital, Inc., a specialty finance company, invests in residential mortgage-backed securities (RMBS) in the United States. The US$640m market-cap company posted a loss in its most recent financial year of US$39m and a latest trailing-twelve-month loss of US$38m shrinking the gap between loss and breakeven. As path to profitability is the topic on Orchid Island Capital's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

According to the 3 industry analysts covering Orchid Island Capital, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$16m in 2024. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 117% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Orchid Island Capital given that this is a high-level summary, however, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Orchid Island Capital is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn't exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Orchid Island Capital which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Orchid Island Capital, take a look at Orchid Island Capital's company page on Simply Wall St. We've also compiled a list of important factors you should further examine:

1. Historical Track Record: What has Orchid Island Capital's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Orchid Island Capital's board and the CEO's background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.