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Digital Realty (DLR)
NYSE:DLR
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Digital Realty
(NYSE:DLR)75Outperform
Positive Factors
Financial Performance
The company reported solid results that demonstrate continued strong demand for data center capacity, with an ability to drive price increases.
Growth Potential
The substantial backlog of $697M of signed leases, combined with positive re-leasing spreads, provide for accelerated growth in 2025 and beyond as these leases commence.
Negative Factors
Earnings Guidance
Guidance for FY2025 was slightly below estimates/consensus, largely due to FX headwinds.
Digital Realty (DLR) vs. S&P 500 (SPY)
Market Cap
$49.96B
Dividend Yield3.29%
Average Volume (3M)2.74M
Price to Earnings (P/E)92.0
Beta (1Y)0.96
Revenue Growth1.42%
EPS Growth-42.07%
CountryUS
Employees3,664
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)1.63
Shares Outstanding336,644,260
10 Day Avg. Volume2,918,258
30 Day Avg. Volume2,741,756
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)9.13
Price to Cash Flow (P/CF)16.20
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$189.11Price Target Upside26.77% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering19
Digital Realty Business Overview & Revenue Model
Company DescriptionDigital Realty (DLR) is a leading global provider of data center, colocation, and interconnection solutions. The company supports the data infrastructure needs of various industries, including technology, telecommunications, healthcare, and financial services. Digital Realty's extensive portfolio includes data centers strategically located around the world, offering secure, reliable, and scalable environments that help businesses efficiently manage their critical IT operations and digital transformation initiatives.
How the Company Makes MoneyDigital Realty makes money primarily through leasing colocation and data center space to enterprises and service providers. This includes long-term leases for wholesale data center space as well as retail colocation services. The company also generates revenue from interconnection services, which enable customers to connect directly with each other and to various networks and cloud service providers. Moreover, Digital Realty benefits from offering additional managed services and support, which enhance its value proposition and provide incremental revenue. Key partnerships with telecommunications carriers and cloud service providers further enhance their service offerings and drive customer growth. These diverse revenue streams allow Digital Realty to maintain a stable and recurring income base, supported by the growing demand for data storage and processing capabilities worldwide.
Digital Realty Financial Statement Overview
Summary
Digital Realty demonstrates strong financial health with consistent revenue growth, operational efficiency, and a solid balance sheet with no debt. The firm's ability to generate operating cash flow is impressive, yet the fluctuation in net profit margins and historical volatility in free cash flow growth suggests room for improvement in profitability management and cash stability. Overall, the company is well-positioned in the REIT sector with a stable financial foundation.Income Statement
Digital Realty shows a strong gross profit margin consistently around 100% due to its business model as a REIT. The company has demonstrated steady revenue growth over the years, with a 1.4% increase from 2023 to 2024. EBIT and EBITDA margins also reflect healthy operational efficiency, though the net profit margin has fluctuated, decreasing from 17.32% in 2023 to 10.85% in 2024. This decline indicates potential pressures on net profitability despite revenue growth.85
Very Positive
Balance Sheet
Digital Realty's balance sheet is robust with a debt-to-equity ratio of 0 in 2024, indicating no debt, which is exceptional for a REIT. The equity ratio has improved to 47.12% in 2024 from 43.32% in 2023, showing a strong equity base. The return on equity, however, decreased from 4.96% in 2023 to 2.82% in 2024, suggesting reduced profitability relative to equity, but the overall financial stability remains solid.90
Very Positive
Cash Flow
The cash flow statement exhibits a positive trend in operating cash flow and free cash flow, which increased significantly from 2023 to 2024. The operating cash flow to net income ratio is strong at 3.75 in 2024, indicating efficient cash generation. However, free cash flow growth has been volatile in past years, which presents a risk to sustained liquidity improvements.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.55B | 5.48B | 4.69B | 4.43B | 3.90B | Gross Profit |
| 5.55B | 2.88B | 2.69B | 2.67B | 2.40B | EBIT |
| 471.86M | 524.46M | 589.97M | 694.01M | 557.53M | EBITDA |
| 1.87B | 3.16B | 2.24B | 2.25B | 2.04B | Net Income Common Stockholders |
| 602.49M | 948.84M | 377.68M | 1.71B | 356.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 3.87B | 1.63B | 141.77M | 142.70M | 108.50M | Total Assets |
| 45.28B | 44.11B | 41.48B | 36.37B | 36.08B | Total Debt |
| 18.01B | 18.97B | 18.07B | 14.96B | 14.77B | Net Debt |
| 14.14B | 17.34B | 17.93B | 14.82B | 14.66B | Total Liabilities |
| 22.11B | 23.12B | 21.86B | 17.85B | 17.59B | Stockholders Equity |
| 21.34B | 19.12B | 17.58B | 18.00B | 17.72B |
| Cash Flow | Free Cash Flow | |||
| 2.26B | 1.63B | -983.71M | -818.54M | -472.14M | Operating Cash Flow |
| 2.26B | 1.63B | 1.66B | 1.70B | 1.71B | Investing Cash Flow |
| -1.91B | -1.12B | -4.70B | -1.06B | -2.60B | Financing Cash Flow |
| 2.06B | 963.47M | 2.97B | -590.63M | 935.69M |
Digital Realty Technical Analysis
Negative
149.17
Price Trends
169.00
Negative
174.16
Negative
161.95
Negative
Market Momentum
-4.98
Positive
30.36
Neutral
18.86
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DLR, the sentiment is Negative. The current price of 149.17 is below the 20-day moving average (MA) of 161.09, below the 50-day MA of 169.00, and below the 200-day MA of 161.95, indicating a bearish trend. The MACD of -4.98 indicates Positive momentum. The RSI at 30.36 is Neutral, neither overbought nor oversold. The STOCH value of 18.86 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DLR.
Digital Realty Risk Analysis
Digital Realty disclosed 11 risk factors in its most recent earnings report. Digital Realty reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Digital Realty Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $49.96B | 92.03 | 2.98% | 3.29% | 1.42% | -42.07% | |
73 Outperform | $96.73B | 42.96 | 91.38% | 3.13% | -3.05% | 51.74% | |
73 Outperform | $23.72B | 31.78 | -14.67% | 1.79% | -1.18% | 50.21% | |
70 Outperform | $84.86B | 102.52 | 6.27% | 2.00% | 6.84% | -17.14% | |
61 Neutral | $4.91B | 18.99 | -3.12% | 7.77% | 6.71% | -19.69% | |
56 Neutral | $25.94B | 145.20 | -35.81% | 3.30% | 12.22% | -2.68% |
* Real Estate Sector Average
Performance Comparison
DLR
Digital Realty
149.17
8.09
5.73%
AMT
American Tower
212.29
12.31
6.16%
EQIX
Equinix
859.52
-15.97
-1.82%
IRM
Iron Mountain
84.38
5.93
7.56%
SBAC
SBA Communications
223.73
4.06
1.85%
Digital Realty Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -9.49% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
Digital Realty had a strong year in 2024, driven by record leasing and revenue growth, successful capital management, and continued innovation. However, challenges remain with lumpy demand in certain segments and supply chain constraints.Highlights
Record Leasing and Revenue Growth
Achieved a record $1 billion in total leasing for 2024, with significant contributions from the 0 to 1 megawatt plus interconnection segment. Core FFO per share grew by 6% in the fourth quarter, indicating strong financial performance.
Increased Liquidity and Reduced Leverage
Raised over $2 billion in new debt and equity, plus $500 million from asset sales, boosting liquidity to over $6 billion and reducing leverage to 4.8 times at year-end.
Expansion and Innovation in Services
Expanded global portfolio capacity by over 200 megawatts and development pipeline by over 75%. Introduced new products like high-density Colo 2.0 and private AI Exchange.
Strong Global Demand and Customer Growth
Added nearly 600 new logos in 2024, with strong leasing activity in both the Americas and EMEA. Record leasing activity in EMEA and Americas indicates robust demand.
Commitment to ESG and Sustainability
Started construction on a 120-megawatt solar power plant in South Africa and signed community solar agreements in Chicago, supporting 100% renewable energy goals.
Lowlights
Lumpy Demand in Greater than 1 Megawatt Segment
Demand for larger capacity blocks remains inconsistent, with significant deals occurring sporadically, affecting predictability in this segment.
Short-term Headwinds from Capital Recycling
Activities aimed at improving long-term growth have resulted in short-term headwinds, impacting immediate financial results.
Supply Chain and Power Constraints
Supply chain issues and power delivery remain tight, potentially impacting the ability to meet rising demand efficiently.
Company Guidance
During Digital Realty's fourth-quarter 2024 earnings call, the company provided robust guidance for the upcoming fiscal year. They reported a second consecutive quarter of record leasing in the 0 to 1 megawatt plus interconnection segment, contributing to a total of $1 billion in leasing for the year. They also highlighted their financial strategy, which included raising over $2 billion in new debt and equity capital, and securing over $500 million from asset sales and joint venture contributions, enhancing their liquidity to over $6 billion and reducing leverage to 4.8 times. Additionally, Digital Realty achieved a 6% growth in core FFO per share in the fourth quarter. Looking forward to 2025, they are guiding for core FFO growth of 5.7% year-over-year, supported by more than 10% growth in total revenue and adjusted EBITDA, with same capital cash NOI expected to grow 3.5% to 4.5%. The company remains focused on capital recycling, innovation, and meeting the growing demand for data center capacity driven by AI, cloud, and digital transformation initiatives.Digital Realty Corporate Events
Financial Disclosures
Digital Realty Reports Q4 2024 Financial Results
Neutral
Feb 13, 2025
On February 13, 2025, Digital Realty announced its financial results for the quarter ending December 31, 2024, via a press release. This announcement, which included supplemental information available on the company’s website, highlighted the company’s ongoing operations and provided insights into its financial standing, which are critical for stakeholders and investors looking to understand Digital Realty’s market position and future outlook.
Private Placements and FinancingBusiness Operations and Strategy
Digital Realty Announces Euro Notes and Growth Strategy
Positive
Jan 7, 2025
Digital Realty announced the pricing of €850 million in Euro Notes due in 2035, with a 3.875% interest rate, issued by Digital Dutch Finco B.V., a subsidiary. The proceeds will be used to repay debts, acquire properties, and fund development, with implications for reducing financial obligations and supporting growth strategies.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.