REALTY INCOME CORP (O) Stock Fundamental Analysis
NYSE:O - New York Stock Exchange, Inc. - US7561091049 - REIT - Currency: USD
Taking everything into account, O scores 4 out of 10 in our fundamental rating. O was compared to 130 industry peers in the Diversified REITs industry. While O is still in line with the averages on profitability rating, there are concerns on its financial health. While showing a medium growth rate, O is valued expensive at the moment.
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.
Each year in the past 5 years O has been profitable.
Each year in the past 5 years O had a positive operating cash flow.
1.2 Ratios
O's Return On Assets of 1.39% is fine compared to the rest of the industry. O outperforms 62.31% of its industry peers.
O has a Return On Equity of 2.48%. This is comparable to the rest of the industry: O outperforms 55.38% of its industry peers.
O's Return On Invested Capital of 2.78% is in line compared to the rest of the industry. O outperforms 53.08% of its industry peers.
O had an Average Return On Invested Capital over the past 3 years of 2.52%. This is in line with the industry average of 3.15%.
The 3 year average ROIC (2.52%) for O is below the current ROIC(2.78%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.39% | ||
| ROE | 2.48% | ||
| ROIC | 2.78% |
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's Profit Margin of 17.96% is fine compared to the rest of the industry. O outperforms 72.31% of its industry peers.
O's Profit Margin has declined in the last couple of years.
O's Operating Margin of 44.35% is amongst the best of the industry. O outperforms 89.23% of its industry peers.
O's Operating Margin has declined in the last couple of years.
With an excellent Gross Margin value of 92.67%, O belongs to the best of the industry, outperforming 95.38% of the companies in the same industry.
O's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 44.35% | ||
| PM (TTM) | 17.96% | ||
| GM | 92.67% |
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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), O is destroying value.
O has more shares outstanding than it did 1 year ago.
The number of shares outstanding for O has been increased compared to 5 years ago.
Compared to 1 year ago, O has a worse debt to assets ratio.
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 has a Altman-Z score of 1.01. This is in the better half of the industry: O outperforms 75.38% of its industry peers.
A Debt/Equity ratio of 0.69 indicates that O is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.69, O is in the better half of the industry, outperforming 79.23% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.69 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 1.01 |
ROIC/WACC0.39
WACC7.08%
2.3 Liquidity
O has a Current Ratio of 0.80. This is a bad value and indicates that O is not financially healthy enough and could expect problems in meeting its short term obligations.
O has a Current ratio (0.80) which is in line with its industry peers.
O has a Quick Ratio of 0.80. This is a bad value and indicates that O is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.80, O perfoms like the industry average, outperforming 45.38% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.8 | ||
| Quick Ratio | 0.8 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 1.85% over the past year.
O shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -6.62% yearly.
O shows a strong growth in Revenue. In the last year, the Revenue has grown by 22.66%.
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)1.85%
EPS 3Y1.4%
EPS 5Y-6.62%
EPS Q2Q%75%
Revenue 1Y (TTM)22.66%
Revenue growth 3Y36.33%
Revenue growth 5Y28.78%
Sales Q2Q%9.52%
3.2 Future
The Earnings Per Share is expected to grow by 16.14% on average over the next years. This is quite good.
The Revenue is expected to grow by 3.99% on average over the next years.
EPS Next Y45.51%
EPS Next 2Y28.16%
EPS Next 3Y20.23%
EPS Next 5Y16.14%
Revenue Next Year6.32%
Revenue Next 2Y5.85%
Revenue Next 3Y5.14%
Revenue Next 5Y3.99%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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 52.23, which means the current valuation is very expensive for O.
O's Price/Earnings is on the same level as the industry average.
O is valuated expensively when we compare the Price/Earnings ratio to 27.24, which is the current average of the S&P500 Index.
O is valuated quite expensively with a Price/Forward Earnings ratio of 35.69.
O's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. O is cheaper than 67.69% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of O to the average of the S&P500 Index (36.42), we can say O is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 52.23 | ||
| Fwd PE | 35.69 |
4.2 Price Multiples
68.46% of the companies in the same industry are cheaper than O, based on the Enterprise Value to EBITDA ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 16.34 |
4.3 Compensation for Growth
O's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
O has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as O's earnings are expected to grow with 20.23% in the coming years.
PEG (NY)1.15
PEG (5Y)N/A
EPS Next 2Y28.16%
EPS Next 3Y20.23%
5. Dividend
5.1 Amount
O has a Yearly Dividend Yield of 5.75%, which is a nice return.
Compared to an average industry Dividend Yield of 6.57, O has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.40, O pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.75% |
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.
Dividend Growth(5Y)4.2%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
O pays out 286.38% 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.
DP286.38%
EPS Next 2Y28.16%
EPS Next 3Y20.23%
57.45
+0.88 (+1.56%)
Chartmill FA Rating
GICS SectorReal Estate
GICS IndustryGroupEquity Real Estate Investment Trusts (REITs)
GICS IndustryDiversified REITs
Earnings (Last)
Earnings (Next)
Inst Owners79.09%
Inst Owner Change-0.02%
Ins Owners0.1%
Ins Owner Change3.79%
Market Cap51.88B
Analysts70.34
Price Target62.25 (8.36%)
Short Float %3.53%
Short Ratio5.92
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.75% |
Yearly Dividend3.28
Dividend Growth(5Y)4.2%
DP286.38%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-32.24%
Min EPS beat(2)-41.01%
Max EPS beat(2)-23.48%
EPS beat(4)0
Avg EPS beat(4)-26.32%
Min EPS beat(4)-41.01%
Max EPS beat(4)-19.05%
EPS beat(8)1
Avg EPS beat(8)-23.43%
EPS beat(12)3
Avg EPS beat(12)-14.35%
EPS beat(16)3
Avg EPS beat(16)-20.04%
Revenue beat(2)2
Avg Revenue beat(2)2.4%
Min Revenue beat(2)1.46%
Max Revenue beat(2)3.33%
Revenue beat(4)4
Avg Revenue beat(4)2.96%
Min Revenue beat(4)1.46%
Max Revenue beat(4)5.3%
Revenue beat(8)8
Avg Revenue beat(8)3.04%
Revenue beat(12)10
Avg Revenue beat(12)2.4%
Revenue beat(16)14
Avg Revenue beat(16)2.66%
PT rev (1m)0.09%
PT rev (3m)0.51%
EPS NQ rev (1m)-1.34%
EPS NQ rev (3m)-2.93%
EPS NY rev (1m)-1.34%
EPS NY rev (3m)-5.8%
Revenue NQ rev (1m)0.29%
Revenue NQ rev (3m)1.26%
Revenue NY rev (1m)0.13%
Revenue NY rev (3m)1.15%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 52.23 | ||
| Fwd PE | 35.69 | ||
| P/S | 9.62 | ||
| P/FCF | N/A | ||
| P/OCF | 14.48 | ||
| P/B | 1.33 | ||
| P/tB | 1.86 | ||
| EV/EBITDA | 16.34 |
EPS(TTM)1.1
EY1.91%
EPS(NY)1.61
Fwd EY2.8%
FCF(TTM)-0.51
FCFYN/A
OCF(TTM)3.97
OCFY6.9%
SpS5.97
BVpS43.22
TBVpS30.88
PEG (NY)1.15
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.39% | ||
| ROE | 2.48% | ||
| ROCE | 3.51% | ||
| ROIC | 2.78% | ||
| ROICexc | 2.79% | ||
| ROICexgc | 3.35% | ||
| OM | 44.35% | ||
| PM (TTM) | 17.96% | ||
| GM | 92.67% | ||
| FCFM | N/A |
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-Score6
Asset Turnover0.08
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.69 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 5.63 | ||
| Cap/Depr | 166.92% | ||
| Cap/Sales | 75.04% | ||
| Interest Coverage | 2.36 | ||
| Cash Conversion | 74.4% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.8 | ||
| Quick Ratio | 0.8 | ||
| Altman-Z | 1.01 |
F-Score6
WACC7.08%
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)1.85%
EPS 3Y1.4%
EPS 5Y-6.62%
EPS Q2Q%75%
EPS Next Y45.51%
EPS Next 2Y28.16%
EPS Next 3Y20.23%
EPS Next 5Y16.14%
Revenue 1Y (TTM)22.66%
Revenue growth 3Y36.33%
Revenue growth 5Y28.78%
Sales Q2Q%9.52%
Revenue Next Year6.32%
Revenue Next 2Y5.85%
Revenue Next 3Y5.14%
Revenue Next 5Y3.99%
EBIT growth 1Y23.18%
EBIT growth 3Y34%
EBIT growth 5Y25.67%
EBIT Next Year112.05%
EBIT Next 3Y33.51%
EBIT Next 5Y21.23%
FCF growth 1Y92.71%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y28.78%
OCF growth 3Y39.29%
OCF growth 5Y27.3%