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Read This to Understand Realty Income Stock

It's been a great morning session for Realty Income investors, who saw their shares rise 1.5% to a price of $61.63 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.

a Lower P/B Ratio Than Its Sector Average but Priced Beyond Its Margin of Safety:

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 30.37 and an average price to book (P/B) ratio of 2.09. In contrast, Realty Income has a trailing 12 month P/E ratio of 57.1 and a P/B ratio of 1.39.

Realty Income's PEG ratio is 2.06, 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.

Strong Revenue Growth but a Flat EPS Growth Trend:

2018 2019 2020 2021 2022 2023
Revenue (M) $1,328 $1,488 $1,647 $2,080 $3,344 $4,079
Operating Margins n/a 30.0% 25.0% 19.0% 27.0% 23.0%
Net Margins 27% 28% 24% 17% 26% 21%
Net Income (M) $364 $436 $395 $359 $869 $872
Net Interest Expense (M) $266 $291 $309 $324 $465 $730
Depreciation & Amort. (M) $540 $594 $677 $898 $1,670 $1,895
Diluted Shares (M) 290 316 345 415 612 693
Earnings Per Share $1.26 $1.38 $1.14 $0.87 $1.42 $1.26
EPS Growth n/a 9.52% -17.39% -23.68% 63.22% -11.27%
Avg. Price $43.27 $58.52 $52.53 $59.73 $64.45 $61.63
P/E Ratio 34.34 42.41 45.68 68.66 45.39 48.91
Free Cash Flow (M) $915 $1,045 $1,107 $1,303 $2,468 $2,890
CAPEX (M) $25 $24 $9 $19 $96 $69
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.

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