Today we're going to take a closer look at large-cap Real Estate company Realty, whose shares are currently trading at $56.15. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Realty Income, The Monthly Dividend Company, is an S&P 500 company and member of the S&P 500 Dividend Aristocrats index. 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, Realty has a trailing 12 month P/E ratio of 41.9 and a P/B ratio of 1.28.
Realty's PEG ratio is 1.95, 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.
Exceptional Profitability Overshadowed by Excessive Leverage:
| 2018-02-22 | 2019-03-01 | 2020-02-24 | 2021-02-23 | 2022-02-23 | 2023-02-22 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $1,216 | $1,328 | $1,488 | $1,647 | $2,080 | $3,344 |
| Operating Margins | 48% | 48% | 50% | 48% | 46% | 39% |
| Net Margins | 26.0% | 27.0% | 28.0% | 24.0% | 17.0% | 26.0% |
| Net Income (MM) | $319 | $364 | $436 | $395 | $359 | $869 |
| Net Interest Expense (MM) | -$247 | -$266 | -$291 | -$309 | -$324 | -$465 |
| Depreciation & Amort. (MM) | -$499 | -$540 | -$594 | -$677 | -$898 | -$1,670 |
| Earnings Per Share | $1.07 | $1.22 | $1.34 | $1.11 | $0.92 | $1.42 |
| EPS Growth | n/a | 14.02% | 9.84% | -17.16% | -17.12% | 54.35% |
| Diluted Shares (MM) | 283 | 299 | 326 | 356 | 392 | 612 |
| Free Cash Flow (MM) | $2,289 | $2,710 | $960 | $856 | $1,072 | $2,128 |
| Capital Expenditures (MM) | -$1,413 | -$1,769 | $109 | $259 | $251 | $436 |
| Net Current Assets (MM) | -$6,534 | -$6,968 | -$8,418 | -$8,593 | -$17,292 | -$20,061 |
| Long Term Debt (MM) | $445 | $569 | $499 | $249 | $12,749 | $14,528 |
| Net Debt / EBITDA | 0.5 | 0.69 | 0.86 | -0.39 | 7.59 | 5.74 |
