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Digital Realty Trust Inc DLR

Morningstar Rating
$150.60 +3.79 (2.58%)
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Company Report

Digital Realty Earnings: Results Don’t Match Strong Demand; Clouded by Asset Sales, JV Investments

Digital Realty’s fourth-quarter 2023 result was mediocre considering the very strong demand environment we believe premier data center providers like Digital Realty are in. Renewal pricing remained strong, but bookings were modest and sales stagnant. Management’s 2024 sales outlook was also disappointing, but it’s possible that is misleading as numerous puts and takes, which aren’t indicative of momentum in the firm’s core rental and interconnection revenue, are at play. More broadly, the trajectory of Digital Realty’s financial performance continues to disappoint us, considering the strong position we believe it is in and the firm’s constant financial maneuvers make it difficult for investors to get a true sense of what’s under the hood. We’re maintaining our $135 fair value estimate and think the stock is fairly valued.

Price vs Fair Value

DLR is trading at a 12% premium.
Price
$150.60
Fair Value
$154.00
Uncertainty
High
1-Star Price
$422.31
5-Star Price
$31.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Digital Realty's shift toward connection and co-location exposes it to the most attractive parts of the data center business and the growth tailwinds of cloud providers and data connectivity.

Bears

Equinix's foray into hyperscale eliminates Digital Realty's distinction as the biggest data center provider offering a full suite of services, from single cabinets to full, hyperscale data centers.

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News

Trading Information

Previous Close Price
$146.81
Day Range
$146.18150.66
52-Week Range
$86.33150.66
Bid/Ask
$150.40 / $150.94
Market Cap
$47.03 Bil
Volume/Avg
2.3 Mil / 2.2 Mil

Key Statistics

Price/Earnings (Normalized)
205.89
Price/Sales
8.50
Dividend Yield (Trailing)
3.24%
Dividend Yield (Forward)
3.24%
Total Yield
3.24%

Company Profile

Digital Realty owns and operates over 300 data centers worldwide. It has nearly 40 million rentable square feet across five continents. Digital's offerings range from retail co-location, where an enterprise may rent a single cabinet and rely on Digital to provide all the accommodations, to "cold shells," where hyperscale cloud service providers can simply rent much, or all, of a barren, power-connected building. In recent years, Digital Realty has de-emphasized cold shells and now primarily provides higher-level service to tenants, which outsource their related IT needs to Digital. The company operates as a real estate investment trust.
Sector
Real Estate
Industry
REIT - Specialty
Stock Style Box
Mid Core
Total Number of Employees
3,664

Competitors

Valuation

Metric
DLR
NXT
EQIX
Price/Earnings (Normalized)
205.8985.22
Price/Book Value
2.553.866.81
Price/Sales
8.5020.0510.34
Price/Cash Flow
23.1073.0025.72
Price/Earnings
DLR
NXT
EQIX

Financial Strength

Metric
DLR
NXT
EQIX
Quick Ratio
0.607.491.07
Current Ratio
0.707.831.13
Interest Coverage
3.340.333.56
Quick Ratio
DLR
NXT
EQIX

Profitability

Metric
DLR
NXT
EQIX
Return on Assets (Normalized)
2.86%−1.25%4.21%
Return on Equity (Normalized)
7.05%−2.18%11.07%
Return on Invested Capital (Normalized)
4.19%0.13%5.47%
Return on Assets
DLR
NXT
EQIX
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REIT - Specialty Industry Comparables

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Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
AMT
American Tower CorpZphdcn$94.1 Bil
EQIX
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CCI
Crown Castle IncHctld$48.2 Bil
WY
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IRM
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SBAC
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GLPI
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RYN
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UNIT
Uniti Group IncTnsm$1.5 Bil

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