Morningstar Rating
Stock XNYS Rating as of
$52.47 +0.14(0.27%)
View Full ChartAs of Delayed Price Pre-Open:$52.94 +0.46
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Company Report
Company Report
Realty Income: After Rising Interest Rate-Induced Selloff, Trading at a Material Discount
Kevin Brown
Realty Income currently trades at a material discount to our $76 fair value estimate for the no-moat company. We think that the shares have traded down since August 2022 due to rising interest rates. In our analysis of stock performance and interest rate movements, we found that Realty Income is the most sensitive REIT we cover, with the company’s stock showing the greatest negative correlation with interest rates. The company has positioned itself as “The Monthly Dividend Company,” so many investors are attracted to the name when interest rates are low. However, those investors may rotate out of the name and invest in risk-free Treasuries when interest rates rise. Additionally, since the company sets annual rent escalators relatively low, the company relies on executing billions in acquisitions each year to fuel the company’s overall growth. Rising interest rates have reduced the spread between the company’s acquisition cap rates and the weighted average cost of capital used to fund those acquisitions, thus potentially reducing growth.
O is trading at a 31% discount.
Price
$52.47
Fair Value
$23.00
Uncertainty
Low
- 1-Star Price
- $44.00
- 5-Star Price
- $27.40
- Economic Moat
- Gknwk
- Capital Allocation
- Lhjkzqlzw
Bulls Say, Bears Say
Bulls Say, Bears Say
Bulls
Realty Income provides a reliable, albeit slow-growing, monthly dividend built on a steadily performing underlying portfolio through various market conditions.
Bears
It will take an increasingly greater volume of attractive risk-adjusted acquisitions to create meaningful shareholder value growth, possibly pushing Realty Income to take more risk as competition expands for its traditionally targeted assets.
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News
News
- Realty Income Announces Operating Results for the Three Months and Year Ended December 31, 2023
- Realty Income Announces Appointment of Jeff A. Jacobson to Board of Directors and Retirement of Board Member Ronald L. Merriman
- 644th Consecutive Common Stock Monthly Dividend and Preferred Stock Quarterly Dividend Declared by Realty Income
- Realty Income Announces €527 Million Inaugural Pan-European Sale and Leaseback With Decathlon, One of the World's Leading Sports Brands
- Realty Income Announces 2023 Dividend Tax Allocation for Realty Income Corporation and Spirit Realty Capital, Inc.
- Realty Income Closes Merger with Spirit Realty Capital
- Realty Income Announces Expiration and Final Results of Exchange Offer and Consent Solicitations
- Spirit Realty Capital Shareholders Approve Realty Income Merger
Trading Information
Trading Information
- Previous Close Price
- $52.33
- Day Range
$51.96–52.65
- 52-Week Range
$45.04–67.05
- Bid/Ask
- $52.88/$52.99
- Market Cap
- $45.18 Bil
- Volume/Avg
- 2,901/7.5 Mil
Key Statistics
Key Statistics
- Price/Earnings (Normalized)
- 37.34
- Price/Sales
- 8.85
- Dividend Yield (Trailing)
- 5.85%
- Dividend Yield (Forward)
- 5.87%
- Total Yield
- 5.85%
Company Profile
Company Profile
Realty Income owns roughly 13,300 properties, most of which are freestanding, single-tenant, triple-net-leased retail properties. Its properties are located in 49 states and Puerto Rico and are leased to 250 tenants from 47 industries. Recent acquisitions have added industrial, gaming, office, manufacturing, and distribution properties, which make up roughly 17% of revenue.
- Sector
- Real Estate
- Industry
- REIT - Retail
- Stock Style Box
- Mid Core
- Total Number of Employees
- 395
- Website
- https://www.realtyincome.com
Competitors
Competitors
- Federal Realty Investment Trust FRT
- Regency Centers Corp REG
- Kimco Realty Corp KIM
Valuation
Valuation
| Metric | O | FRT | REG |
|---|---|---|---|
Price/Earnings (Normalized) | 37.34 | 38.28 | 28.29 |
Price/Book Value | 1.18 | 2.98 | 1.62 |
Price/Sales | 8.85 | 7.25 | 8.16 |
Price/Cash Flow | 11.89 | 14.83 | 14.45 |
Price/Earnings
O
FRT
REG
Financial Strength
Financial Strength
| Metric | O | FRT | REG |
|---|---|---|---|
Quick Ratio | 1.43 | 1.55 | 0.59 |
Current Ratio | 1.49 | 1.55 | 0.64 |
Interest Coverage | 2.48 | 2.45 | 3.37 |
Quick Ratio
O
FRT
REG
Profitability
Profitability
| Metric | O | FRT | REG |
|---|---|---|---|
Return on Assets (Normalized) | 2.30% | 3.11% | 3.33% |
Return on Equity (Normalized) | 3.99% | 9.35% | 6.00% |
Return on Invested Capital (Normalized) | 3.64% | 4.99% | 4.71% |
Return on Assets
O
FRT
REG
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REIT - Retail Industry Comparables
REIT - Retail Industry Comparables
| Ticker | Name | Morningstar Rating for Stocks | Economic Moat | Market Cap |
|---|---|---|---|---|
| SPG | Simon Property Group Inc | Nqms | $48.5 Bil | |
| KIM | Kimco Realty Corp | Mxw | $13.2 Bil | |
| LKREF | Link Real Estate Investment Trust | Kgz | $12.5 Bil | |
| REG | Regency Centers Corp | Xwqp | $11.2 Bil | |
| UNBLF | Unibail-Rodamco-Westfield Act. SIIC ET STES FONC.EUROP. | Frdcg | $10.4 Bil | |
| STGPF | Scentre Group | Qlzkg | $10.1 Bil | |
| CPAMF | CapitaLand Integrated Commercial Trust | Gjhtl | $9.7 Bil | |
| FRT | Federal Realty Investment Trust | Tfs | $8.3 Bil | |
| MAC | Macerich Co | Xdln | $3.7 Bil |
