REALTY INCOME CORP (O) Stock Fundamental Analysis
NYSE:O - New York Stock Exchange, Inc. - US7561091049 - REIT - Currency: USD
O gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 130 industry peers in the Diversified REITs industry. There are concerns on the financial health of O while its profitability can be described as average. While showing a medium growth rate, O is valued expensive at the moment. O also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
O had positive earnings in the past year.
O had a positive operating cash flow in the past year.
O had positive earnings in each of the past 5 years.
In the past 5 years O always reported a positive cash flow from operatings.
1.2 Ratios
O has a Return On Assets of 1.23%. This is in the better half of the industry: O outperforms 61.54% of its industry peers.
The Return On Equity of O (2.18%) is comparable to the rest of the industry.
Looking at the Return On Invested Capital, with a value of 2.77%, O is in line with its industry, outperforming 53.85% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for O is in line with the industry average of 3.17%.
The 3 year average ROIC (2.52%) for O is below the current ROIC(2.77%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.23% | ||
| ROE | 2.18% | ||
| ROIC | 2.77% |
ROA(3y)1.5%
ROA(5y)1.45%
ROE(3y)2.62%
ROE(5y)2.58%
ROIC(3y)2.52%
ROIC(5y)2.5%
1.3 Margins
O has a better Profit Margin (16.09%) than 70.00% of its industry peers.
In the last couple of years the Profit Margin of O has declined.
The Operating Margin of O (44.10%) is better than 88.46% of its industry peers.
In the last couple of years the Operating Margin of O has declined.
O has a Gross Margin of 92.83%. This is amongst the best in the industry. O outperforms 95.38% of its industry peers.
O's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 44.1% | ||
| PM (TTM) | 16.09% | ||
| GM | 92.84% |
OM growth 3Y-1.7%
OM growth 5Y-2.42%
PM growth 3Y-2.35%
PM growth 5Y-11.32%
GM growth 3Y-0.27%
GM growth 5Y-0.26%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so O is destroying value.
O has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, O has more shares outstanding
O has a worse debt/assets ratio than last year.
2.2 Solvency
Based on the Altman-Z score of 1.01, we must say that O is in the distress zone and has some risk of bankruptcy.
O's Altman-Z score of 1.01 is fine compared to the rest of the industry. O outperforms 76.15% of its industry peers.
The Debt to FCF ratio of O is 138.86, which is on the high side as it means it would take O, 138.86 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of O (138.86) is comparable to the rest of the industry.
O has a Debt/Equity ratio of 0.68. This is a neutral value indicating O is somewhat dependend on debt financing.
O has a better Debt to Equity ratio (0.68) than 77.69% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.68 | ||
| Debt/FCF | 138.86 | ||
| Altman-Z | 1.01 |
ROIC/WACC0.39
WACC7.09%
2.3 Liquidity
A Current Ratio of 0.55 indicates that O may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.55, O is doing worse than 75.38% of the companies in the same industry.
A Quick Ratio of 0.55 indicates that O may have some problems paying its short term obligations.
With a Quick ratio value of 0.55, O is not doing good in the industry: 74.62% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.55 | ||
| Quick Ratio | 0.55 |
3. Growth
3.1 Past
O shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -22.22%.
The Earnings Per Share has been decreasing by -6.62% on average over the past years.
The Revenue has grown by 29.23% in the past year. This is a very strong growth!
Measured over the past years, O shows a very strong growth in Revenue. The Revenue has been growing by 28.78% on average per year.
EPS 1Y (TTM)-22.22%
EPS 3Y1.4%
EPS 5Y-6.62%
EPS Q2Q%-23.33%
Revenue 1Y (TTM)29.23%
Revenue growth 3Y36.33%
Revenue growth 5Y28.78%
Sales Q2Q%24.53%
3.2 Future
The Earnings Per Share is expected to grow by 14.73% on average over the next years. This is quite good.
Based on estimates for the next years, O will show a small growth in Revenue. The Revenue will grow by 3.70% on average per year.
EPS Next Y54.46%
EPS Next 2Y30.41%
EPS Next 3Y20.38%
EPS Next 5Y14.73%
Revenue Next Year5.05%
Revenue Next 2Y5.12%
Revenue Next 3Y4.34%
Revenue Next 5Y3.7%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 58.05, which means the current valuation is very expensive for O.
The rest of the industry has a similar Price/Earnings ratio as O.
O is valuated expensively when we compare the Price/Earnings ratio to 28.79, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 37.58, O can be considered very expensive at the moment.
66.92% of the companies in the same industry are more expensive than O, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 21.38. O is valued rather expensively when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 58.05 | ||
| Fwd PE | 37.58 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, O is valued a bit more expensive than 66.92% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of O is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 267.82 | ||
| EV/EBITDA | 16.28 |
4.3 Compensation for Growth
O's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The decent profitability rating of O may justify a higher PE ratio.
O's earnings are expected to grow with 20.38% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.07
PEG (5Y)N/A
EPS Next 2Y30.41%
EPS Next 3Y20.38%
5. Dividend
5.1 Amount
O has a Yearly Dividend Yield of 5.52%, which is a nice return.
Compared to an average industry Dividend Yield of 16.90, O has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.47, O pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.52% |
5.2 History
The dividend of O has a limited annual growth rate of 4.20%.
O has been paying a dividend for at least 10 years, so it has a reliable track record.
O has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)4.2%
Div Incr Years27
Div Non Decr Years27
5.3 Sustainability
O pays out 318.38% of its income as dividend. This is not a sustainable payout ratio.
The dividend of O is growing, but earnings are growing more, so the dividend growth is sustainable.
DP318.38%
EPS Next 2Y30.41%
EPS Next 3Y20.38%
56.89
-0.26 (-0.45%)
Chartmill FA Rating
GICS SectorReal Estate
GICS IndustryGroupEquity Real Estate Investment Trusts (REITs)
GICS IndustryDiversified REITs
Earnings (Last)
Earnings (Next)
Inst Owners79.65%
Inst Owner Change0.2%
Ins Owners0.09%
Ins Owner Change-0.98%
Market Cap50.73B
Analysts70.34
Price Target61.99 (8.96%)
Short Float %2.29%
Short Ratio3.23
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.52% |
Yearly Dividend3.28
Dividend Growth(5Y)4.2%
DP318.38%
Div Incr Years27
Div Non Decr Years27
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-30.03%
Min EPS beat(2)-41.01%
Max EPS beat(2)-19.05%
EPS beat(4)0
Avg EPS beat(4)-35.4%
Min EPS beat(4)-59.78%
Max EPS beat(4)-19.05%
EPS beat(8)1
Avg EPS beat(8)-20.67%
EPS beat(12)3
Avg EPS beat(12)-14.16%
EPS beat(16)3
Avg EPS beat(16)-19.44%
Revenue beat(2)2
Avg Revenue beat(2)1.61%
Min Revenue beat(2)1.46%
Max Revenue beat(2)1.75%
Revenue beat(4)4
Avg Revenue beat(4)2.79%
Min Revenue beat(4)1.46%
Max Revenue beat(4)5.3%
Revenue beat(8)8
Avg Revenue beat(8)2.94%
Revenue beat(12)10
Avg Revenue beat(12)2.44%
Revenue beat(16)14
Avg Revenue beat(16)2.58%
PT rev (1m)0.28%
PT rev (3m)-4.02%
EPS NQ rev (1m)-6.08%
EPS NQ rev (3m)-5.56%
EPS NY rev (1m)-6.35%
EPS NY rev (3m)-6.37%
Revenue NQ rev (1m)-0.22%
Revenue NQ rev (3m)-0.45%
Revenue NY rev (1m)-0.56%
Revenue NY rev (3m)-0.91%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 58.05 | ||
| Fwd PE | 37.58 | ||
| P/S | 9.62 | ||
| P/FCF | 267.82 | ||
| P/OCF | 14.2 | ||
| P/B | 1.31 | ||
| P/tB | 1.84 | ||
| EV/EBITDA | 16.28 |
EPS(TTM)0.98
EY1.72%
EPS(NY)1.51
Fwd EY2.66%
FCF(TTM)0.21
FCFY0.37%
OCF(TTM)4.01
OCFY7.04%
SpS5.91
BVpS43.55
TBVpS30.93
PEG (NY)1.07
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.23% | ||
| ROE | 2.18% | ||
| ROCE | 3.51% | ||
| ROIC | 2.77% | ||
| ROICexc | 2.79% | ||
| ROICexgc | 3.37% | ||
| OM | 44.1% | ||
| PM (TTM) | 16.09% | ||
| GM | 92.84% | ||
| FCFM | 3.59% |
ROA(3y)1.5%
ROA(5y)1.45%
ROE(3y)2.62%
ROE(5y)2.58%
ROIC(3y)2.52%
ROIC(5y)2.5%
ROICexc(3y)2.53%
ROICexc(5y)2.53%
ROICexgc(3y)3.06%
ROICexgc(5y)3.02%
ROCE(3y)3.19%
ROCE(5y)3.16%
ROICexcg growth 3Y13.03%
ROICexcg growth 5Y-1.09%
ROICexc growth 3Y15.09%
ROICexc growth 5Y-3.03%
OM growth 3Y-1.7%
OM growth 5Y-2.42%
PM growth 3Y-2.35%
PM growth 5Y-11.32%
GM growth 3Y-0.27%
GM growth 5Y-0.26%
F-Score5
Asset Turnover0.08
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.68 | ||
| Debt/FCF | 138.86 | ||
| Debt/EBITDA | 5.57 | ||
| Cap/Depr | 141.25% | ||
| Cap/Sales | 64.2% | ||
| Interest Coverage | 2.4 | ||
| Cash Conversion | 75.7% | ||
| Profit Quality | 22.34% | ||
| Current Ratio | 0.55 | ||
| Quick Ratio | 0.55 | ||
| Altman-Z | 1.01 |
F-Score5
WACC7.09%
ROIC/WACC0.39
Cap/Depr(3y)369.18%
Cap/Depr(5y)430.26%
Cap/Sales(3y)177.32%
Cap/Sales(5y)195.09%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-22.22%
EPS 3Y1.4%
EPS 5Y-6.62%
EPS Q2Q%-23.33%
EPS Next Y54.46%
EPS Next 2Y30.41%
EPS Next 3Y20.38%
EPS Next 5Y14.73%
Revenue 1Y (TTM)29.23%
Revenue growth 3Y36.33%
Revenue growth 5Y28.78%
Sales Q2Q%24.53%
Revenue Next Year5.05%
Revenue Next 2Y5.12%
Revenue Next 3Y4.34%
Revenue Next 5Y3.7%
EBIT growth 1Y29.44%
EBIT growth 3Y34%
EBIT growth 5Y25.67%
EBIT Next Year112.34%
EBIT Next 3Y33.45%
EBIT Next 5Y20.97%
FCF growth 1Y103.67%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y20.77%
OCF growth 3Y39.29%
OCF growth 5Y27.3%