The headline numbers for Digital Realty Trust (DLR) give insight into how the company performed in the quarter ended March 2025, but it may be worthwhile to compare some of its key metrics to Wall Street estimates and the year-ago actuals.
DLR's Q1 results are likely to reflect gains led by a rise in demand for data centers from growing digitization and a diverse tenant base.
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 March 2025.
It's been a roller coaster year for investors, with the benchmark S&P 500 dipping into correction territory and flirting with a bear market earlier this month. With the Trump administration vowing to implement tariffs that might depress business activity, volatility has taken center stage.
Due to improved spreads, we now find REIT preferred stocks, particularly Digital Realty, more attractive, focusing on yields close to or above 6.5%. Digital Realty, a leading data center provider, has a solid asset coverage ratio and market-adjusted asset yield, making it a strong investment option. DLR's preferred shares, especially DLR.PR.L, offer high yields around 6.46% and are rated Baa3 by Moody's, with our adjusted score close to A2.
The S&P 500 remains close to correction territory, and there are some excellent bargains to be found in the stock market right now. And not just when it comes to beaten-down technology stocks.
Digital Realty Trust, Inc. (NYSE:DLR ) Citi's 30th Annual Global Property CEO Conference Call March 4, 2025 2:10 PM ET Company Participants Andrew Power - President, CEO & Director Jordan Sadler - SVP, Public & Private Investor Relations Matt Mercier - CFO Conference Call Participants Michael Rollins - Citigroup Inc. Operator Welcome to the 2025 Global Property CEO Conference. I'm Nick Joseph here with Mike Rollins with Citi Research, and we are pleased to have with us Digital Realty and CEO, Andy Power.
Last week, I (Tom Yeung) introduced you to two cyclical stocks to buy immediately. These promising firms couldn't have been more different, at least from a business perspective: Digital Realty Trust Inc. ( DLR ) is a $50 billion data center company leasing millions of square feet to AI cloud computing customers.
DLR's recent steep correction has been well warranted, thanks to DeepSeek, as the stock finally nears our fair value estimates while offering a double-digit upside potential. The REIT's robust FQ4 2024 performance, strategic capacity acquisitions, and expanded partnerships have drastically improved its prospects and balance sheet health. DLR's FY 2025 FFO per share guidance implies a potentially rich dividend hike ahead, naturally improving its dividend investment thesis.
If you were a big fan of “That ‘70s Show,” get ready because we will soon get a revival, and it will likely not be as entertaining.
Digital Realty's updated fair value range is $102 to $174, based on a 6.9% required return and 1.8%-3.9% dividend growth rates in perpetuity. Despite strong data center demand and reduced leverage, DLR's revenue guidance missed analyst expectations, and shareholder dilution remains a concern. DLR's valuation is unattractive compared to the broader REIT sector and its historical averages, making current price levels risky for investment.
Last month, I (Tom Yeung) introduced eight cyclical stocks to buy immediately. These high-quality companies had winds in their sails, and all have since performed splendidly.