Today we're going to take a closer look at large-cap Real Estate company Realty, whose shares are currently trading at $54.48. 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 25.55 and an average price to book (P/B) ratio of 2.1. In contrast, Realty has a trailing 12 month P/E ratio of 41.3 and a P/B ratio of 1.25.
Realty's PEG ratio is 1.86, 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 Business Has Weak Operating Margins:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $1,328 | $1,488 | $1,647 | $2,080 | $3,344 | $3,891 |
| Revenue Growth | n/a | 12.07% | 10.68% | 26.31% | 60.72% | 16.38% |
| Net Margins | 27% | 28% | 24% | 17% | 26% | 23% |
| Net Income (MM) | $365 | $437 | $397 | $361 | $872 | $885 |
| Net Interest Expense (MM) | $266 | $291 | $309 | $324 | $465 | $653 |
| Depreciation & Amort. (MM) | $540 | $594 | $677 | $898 | $1,670 | $1,857 |
| Diluted Shares (MM) | 290 | 316 | 345 | 415 | 612 | 844 |
| Free Cash Flow (MM) | -$829 | $1,045 | $1,107 | $1,303 | $2,468 | $2,752 |
| Capital Expenditures (MM) | $1,769 | $24 | $9 | $19 | $96 | $77 |
| Total Debt (MM) | $2,959 | $8,412 | $17,638 | $29,795 | $34,323 | $40,116 |
