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. There are concerns on the financial health of O while its profitability can be described as average. O is quite expensive at the moment. It does show a decent growth rate. 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's Return On Assets of 1.23% is fine compared to the rest of the industry. O outperforms 61.54% of its industry peers.
O's Return On Equity of 2.18% is in line compared to the rest of the industry. O outperforms 54.62% of its industry peers.
O has a Return On Invested Capital of 2.77%. This is comparable to the rest of the industry: O outperforms 53.85% 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 3.17%.
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's Profit Margin of 16.09% is fine compared to the rest of the industry. O outperforms 70.00% of its industry peers.
O's Profit Margin has declined in the last couple of years.
O has a Operating Margin of 44.10%. This is amongst the best in the industry. O outperforms 88.46% of its industry peers.
O's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 92.83%, O belongs to the top 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 | 44.1% | ||
| 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.
O has more shares outstanding than it did 5 years ago.
The debt/assets ratio for O is higher compared to a year ago.
2.2 Solvency
O has an Altman-Z score of 1.01. This is a bad value and indicates that O is not financially healthy and even has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.01, O is in the better half of the industry, outperforming 76.15% of the companies in the same industry.
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.
Looking at the Debt to FCF ratio, with a value of 138.86, O is in line with its industry, outperforming 51.54% of the companies in the same industry.
A Debt/Equity ratio of 0.68 indicates that O is somewhat dependend on debt financing.
With a decent Debt to Equity ratio value of 0.68, O is doing good in the industry, outperforming 77.69% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.68 | ||
| Debt/FCF | 138.86 | ||
| Altman-Z | 1.01 |
ROIC/WACC0.39
WACC7.11%
2.3 Liquidity
O has a Current Ratio of 0.55. This is a bad value and indicates that O is not financially healthy enough and could expect problems in meeting 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.
O has a Quick ratio of 0.55. This is in the lower half of the industry: O underperforms 74.62% of its industry peers.
| 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%.
Measured over the past years, O shows a decrease in Earnings Per Share. The EPS has been decreasing by -6.62% on average per year.
Looking at the last year, O shows a very strong growth in Revenue. The Revenue has grown by 29.23%.
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
O is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 14.73% yearly.
The Revenue is expected to grow by 3.70% on average over the next years.
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
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 58.05, 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 28.79, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 37.58 indicates a quite expensive valuation of O.
Compared to the rest of the industry, the Price/Forward Earnings ratio of O indicates a somewhat cheap valuation: O is cheaper than 66.92% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of O to the average of the S&P500 Index (21.38), we can say O is valued expensively.
| 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 the industry average as 66.92% of the companies are valued more cheaply.
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.
A more expensive valuation may be justified as O's earnings are expected to grow with 20.38% in the coming years.
PEG (NY)1.07
PEG (5Y)N/A
EPS Next 2Y30.41%
EPS Next 3Y20.38%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 5.52%, O is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 16.86, O has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.51, 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 paid a dividend for at least 10 years, which is 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 %2.22%
Short Ratio3.14
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
WACC7.11%
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%