It hasn't been a great morning session for Realty Income investors, who have watched their shares sink by -1.8% to a price of $58.25. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
a Lower P/B Ratio Than Its Sector Average but Trading Above Its Fair Price:
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 31.12 and an average price to book (P/B) ratio of 2.15. In contrast, Realty Income has a trailing 12 month P/E ratio of 53.9 and a P/B ratio of 1.33.
Realty Income's PEG ratio is 2.1, 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 | $58.34 |
| P/E Ratio | 34.34 | 42.41 | 45.68 | 68.66 | 45.39 | 46.3 |
| Free Cash Flow (M) | $915 | $1,045 | $1,107 | $1,303 | $2,468 | $2,890 |
| CAPEX (M) | $25 | $24 | $9 | $19 | $96 | $69 |
