Digital Realty Trust (DLR) came out with quarterly funds from operations (FFO) of $1.73 per share, beating the Zacks Consensus Estimate of $1.70 per share. This compares to FFO of $1.63 per share a year ago.
Digital Realty Trust forecast annual revenue below Wall Street estimates on Thursday, expecting cautious spending by clients on data center services amid economic uncertainty.
Besides Wall Street's top -and-bottom-line estimates for Digital Realty Trust (DLR), review projections for some of its key metrics to gain a deeper understanding of how the company might have fared during the quarter ended December 2024.
The stock market was having a rough day on Monday, with the S&P 500 (^GSPC -1.73%) benchmark index down by about 1.7% at 11 a.m. ET. However, real estate was one of the biggest exceptions, with the Vanguard Real Estate ETF (VNQ 0.66%) slightly higher for the day.
Investors love dividend stocks because they provide dependable income, passive income streams, and an excellent opportunity for solid total return.
Real estate investment trust (REIT) Digital Realty Trust Inc (NYSE:DLR) is up 3% at $179.15 at last glance, after an upgrade from Deutsche Bank to "buy" from "hold.
DLR is well-poised to gain from its unmatched global footprint of data centers with the growth in cloud computing, the Internet of Things and Big Data.
Digital Realty has shown strong performance but is now overvalued, trading at nearly 29x P/AFFO, which is unsustainable given its low growth projections. Despite record leasing and backlog activity, Digital Realty's occupancy rates remain concerning, and its AFFO growth is not matching expectations. I'm shifting my rating to "Hold" and trimming shares, redeploying capital into American Tower and Prologis, which offer better valuation and growth prospects.
Embracing negativity and learning from setbacks fueled my journey to become a top analyst on Seeking Alpha, focusing on fundamental analysis. Second-level thinking, as taught by mentors like Chuck Carnevale, is crucial for long-term investment success, emphasizing earnings over emotions. REITs, particularly Realty Income, offer strong potential due to their scale, diversification, and disciplined risk management, making them attractive for 2025.
Artificial Intelligence is a significant market driver in 2024, boosting demand for data centers like Digital Realty Trust. DLR has shown consistent FFO results despite challenges, but lags behind peers in Net Income growth, EPS growth, and Return on Equity. DLR's credit rating is stable, with tight credit spreads indicating solid credit quality, but its common stock appears overvalued.
Solid data center demand and strategic investments are expected to support DLR's growth despite a competitive market and asset concentration.
Finding businesses with strong economic moats is crucial for long-term investment success, as they can withstand competition and generate consistent profits. Prologis, Digital Realty, and Realty Income are three “wide moat” REITs with predictable profit streams and strong dividend histories. Prologis and Digital Realty are recommended for their robust portfolios and growth potential, though Digital Realty is currently overvalued.