Read This to Understand Digital Realty Trust (DLR)

We've been asking ourselves recently if the market has placed a fair valuation on Digital Realty Trust. Let's dive into some of the fundamental values of this large-cap Real Estate company to determine if there might be an opportunity here for value-minded investors.

Digital Realty Trust's Valuation Is in Line With Its Sector Averages:

Digital Realty brings companies and data together by delivering the full spectrum of data center, colocation and interconnection solutions. PlatformDIGITAL, the company's global data center platform, provides customers with a secure data "meeting place" and a proven Pervasive Datacenter Architecture (PDx) solution methodology for powering innovation and efficiently managing Data Gravity challenges. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 24.81 and an average price to book (P/B) ratio of 2.24. In contrast, Digital Realty Trust has a trailing 12 month P/E ratio of 103.5 and a P/B ratio of 2.01.

Digital Realty Trust's PEG ratio is 10.5, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

The Company Has a Highly Leveraged Balance Sheet and a Declining EPS Growth Trend:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $3,209 $3,904 $4,428 $4,692
Operating Margins 19.7% 17.4% 17.3% 14.6%
Net Margins 18.07% 9.13% 38.6% 8.05%
Net Income (MM) $580 $356 $1,709 $378
Net Interest Expense (MM) -287 -313 -298 -290
Net Interest Expense (MM) -$287 -$313 -$298 -$290
Depreciation & Amort. (MM) -$1,164 -$1,366 -$1,487 -$1,578
Earnings Per Share $2.35 $1.0 $5.94 $1.1
EPS Growth n/a -57.45% 494.0% -81.48%
Diluted Shares (MM) 209 263 283 291
Free Cash Flow (MM) $1,514 $1,707 $1,702 $1,659
Net Current Assets (MM) -$11,793 -$16,876 -$17,031 -$20,752
Current Ratio 0.42 0.25 0.36 0.25
Long Term Debt (MM) $9,888 $12,773 $13,050 $14,446
Net Debt / EBITDA 4.91 6.36 3.73 7.22
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.