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Digital Realty (DLR)
NYSE:DLR
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Digital Realty (DLR) AI Stock Analysis

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DLR

Digital Realty

(NYSE:DLR)

Rating:74Outperform
Price Target:
$191.00
▲(6.56%Upside)
Digital Realty's strong earnings call, characterized by significant leasing growth and strategic initiatives, is the most impactful factor driving the score. Steady financial performance and stable cash flow further support the stock's attractiveness, though technical indicators remain neutral and valuation appears high, presenting potential risks.
Positive Factors
Industry Position
Digital Realty is clearly a leader in its industry, and is expected to benefit from industry growth as well as consolidation.
Leasing Performance
Record 0-1MW leasing was the highlight, which helps move the needle on nearer-term growth and reflects good execution/share gains.
Negative Factors
Foreign Exchange Risk
There is a foreign exchange rate risk as around 45% of Digital Realty's revenue is contributed by markets outside of the domestic market.
Stock Valuation
DLR’s stock is already fairly valued at current levels, making it harder to see where additional improvement comes from.

Digital Realty (DLR) vs. SPDR S&P 500 ETF (SPY)

Digital Realty Business Overview & Revenue Model

Company DescriptionDigital Realty (DLR) is a global provider of data center, colocation, and interconnection solutions. Serving a diverse range of industries, the company operates a network of data centers in key markets across the world, offering secure, reliable, and scalable infrastructure that supports customers' IT workloads. Digital Realty's services include space, power, and connectivity solutions that enable businesses to deploy and manage their data and applications efficiently.
How the Company Makes MoneyDigital Realty makes money primarily through leasing data center space and providing related services to customers. Their revenue model is based on long-term contracts with customers who pay for space, power, and cooling within Digital Realty's facilities. Additionally, the company generates income from interconnection services, which allow customers to connect their infrastructure to cloud providers and other network resources. They also benefit from partnerships with technology companies and service providers, enhancing their offerings through collaborative solutions. The company's earnings are influenced by factors such as the growing demand for cloud services, digital transformation across industries, and the increasing need for data storage and processing capabilities.

Digital Realty Earnings Call Summary

Earnings Call Date:Jul 24, 2025
(Q1-2025)
|
% Change Since: -0.43%|
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
The earnings call presented a largely positive outlook with several key achievements, including record leasing, growth in core FFO per share, and the formation of a significant US hyperscale fund. Despite challenges from market volatility and potential tariff impacts, the company has demonstrated strong growth and strategic expansion, supported by a robust pipeline and positive sustainability progress.
Q1-2025 Updates
Positive Updates
Record Leasing and Strong Backlog
Digital Realty Trust, Inc. posted strong leasing in the first quarter of 2025 with $242 million, consistent with a record pace set in 2024. The backlog of booked not billed leases reached a new record of $919 million.
Growth in Core FFO Per Share
Core FFO per share grew by 6.1% year-over-year, reflecting strong same-capital operating results and new commencements over the past year.
Successful Formation of US Hyperscale Fund
Digital Realty Trust, Inc. announced its first US hyperscale data center fund, targeting $2.5 billion of equity commitments and supporting approximately $10 billion of hyperscale data center investment.
Expansion and New Market Entries
The company expanded its reach by entering Indonesia and launching its Heracleion One data center in Crete. It also added three new Azure on-ramps in Atlanta, Brussels, and Vienna.
Sustainability Achievements
Digital Realty Trust, Inc. reached 100% renewable energy coverage for operations in Singapore and opened a 16 MW data center in Frankfurt powered by 100% renewable sources.
Negative Updates
Market Volatility and Uncertainty
The backdrop of significant market volatility and uncertainty has created a challenging environment, though the company’s pipeline remains robust.
Potential Tariff Impact on Development Costs
The company is anticipating a modest impact of less than 5% on potential build costs due to tariffs, though proactive measures have been taken to mitigate this.
Company Guidance
During Digital Realty Trust, Inc.'s first quarter 2025 earnings call, the company provided an optimistic guidance, highlighting several key metrics. The firm reported strong leasing activity, achieving $242 million in new leases, which contributed to a record backlog of booked not billed leases totaling $919 million. The company noted core funds from operations (FFO) per share growth exceeded expectations, offering strong visibility for the remainder of 2025 and building momentum into 2026. A notable development was the formation of the first US hyperscale fund, designed to meet growing customer needs and optimize the balance sheet, targeting $2.5 billion in equity commitments to support approximately $10 billion of hyperscale data center investment. Additionally, Digital Realty Trust's data center revenue grew by 7% year over year, and the firm increased its development pipeline by another 70 megawatts, reaching 814 megawatts at 100% share, with 63% preleased. The company also raised its core FFO guidance range for 2025 by 5¢ to $7.05 to $7.15 per share, reflecting updated FX assumptions.

Digital Realty Financial Statement Overview

Summary
Digital Realty shows consistent revenue growth and strong operational margins essential for REITs. Despite declining profitability ratios, the stable balance sheet and strong cash generation capabilities support ongoing operations and investments.
Income Statement
72
Positive
Digital Realty has shown consistent revenue growth with a 2.35% increase from the previous year to the TTM period. The gross profit margin for TTM is robust at 47.49%, but the net profit margin has decreased to 2.69%, indicating rising costs or other expenses affecting net income. EBIT and EBITDA margins are strong at 12.66% and 47.91% respectively, reflecting operational efficiency.
Balance Sheet
65
Positive
The debt-to-equity ratio is 0.86, suggesting a balanced use of debt and equity, which is typical for REITs. The equity ratio of 47.23% indicates a solid capital structure. However, the return on equity has declined to 0.71% in TTM, reflecting lower profitability on shareholder investments.
Cash Flow
78
Positive
Operating cash flow has increased slightly over the period, supporting a strong operating cash flow to net income ratio of 15.21, indicating efficient cash generation relative to net income. The free cash flow has decreased, but the company maintains a positive free cash flow to net income ratio of 10.89, showing adequate cash generation.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue5.63B5.55B5.48B4.69B4.43B3.90B
Gross Profit3.10B3.04B2.88B2.69B2.67B2.40B
EBITDA2.68B2.87B3.16B2.24B2.25B2.04B
Net Income430.96M602.49M948.84M377.68M1.71B356.40M
Balance Sheet
Total Assets45.08B45.28B44.11B41.48B36.37B36.08B
Cash, Cash Equivalents and Short-Term Investments2.32B3.87B1.63B141.77M142.70M108.50M
Total Debt18.30B18.01B18.97B18.07B14.96B14.77B
Total Liabilities21.90B22.11B23.12B21.86B17.85B17.59B
Stockholders Equity21.30B21.34B19.12B17.58B18.00B17.72B
Cash Flow
Free Cash Flow1.65B2.26B1.63B-983.71M-818.54M-472.14M
Operating Cash Flow2.31B2.26B1.63B1.66B1.70B1.71B
Investing Cash Flow-2.82B-1.91B-1.12B-4.70B-1.06B-2.60B
Financing Cash Flow1.86B2.06B963.47M2.97B-590.63M935.69M

Digital Realty Technical Analysis

Technical Analysis Sentiment
Positive
Last Price179.24
Price Trends
50DMA
172.57
Positive
100DMA
161.48
Positive
200DMA
166.59
Positive
Market Momentum
MACD
1.92
Negative
RSI
66.14
Neutral
STOCH
88.44
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DLR, the sentiment is Positive. The current price of 179.24 is above the 20-day moving average (MA) of 173.47, above the 50-day MA of 172.57, and above the 200-day MA of 166.59, indicating a bullish trend. The MACD of 1.92 indicates Negative momentum. The RSI at 66.14 is Neutral, neither overbought nor oversold. The STOCH value of 88.44 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DLR.

Digital Realty Risk Analysis

Digital Realty disclosed 10 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 (59)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$8.81B22.533.69%5.80%1.11%-3.07%
74
Outperform
$14.35B102.63-0.12%6.41%3.12%-116.29%
74
Outperform
$60.37B166.632.14%2.71%2.96%-68.06%
66
Neutral
$8.25B77.273.06%1.87%0.63%258.59%
63
Neutral
$4.77B84.771.15%4.51%10.93%-31.07%
61
Neutral
$12.44B732.74-0.10%5.54%3.74%-102.51%
59
Neutral
€3.18B4.36-3.86%5.15%-3.18%17.24%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DLR
Digital Realty
180.02
36.94
25.82%
ARE
Alexandria Equities
82.05
-27.59
-25.16%
BXP
Boston Properties
70.74
6.43
10.00%
CUZ
Cousins Properties
27.75
3.63
15.05%
KRC
Kilroy Realty
37.24
4.10
12.37%
VNO
Vornado Realty
39.55
11.58
41.40%

Digital Realty Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
Digital Realty Issues €850 Million Euro Notes
Positive
Jun 25, 2025

On June 25, 2025, Digital Dutch Finco B.V., a subsidiary of Digital Realty Trust, issued €850 million in Euro Notes due 2034, with a 3.875% interest rate. The proceeds, approximately €836.6 million after expenses, will be used to repay borrowings, acquire properties, and support general corporate purposes, positioning the company for strategic growth and operational flexibility.

The most recent analyst rating on (DLR) stock is a Buy with a $205.00 price target. To see the full list of analyst forecasts on Digital Realty stock, see the DLR Stock Forecast page.

Private Placements and Financing
Digital Realty Prices €850M Euro Notes Due 2034
Neutral
Jun 17, 2025

On June 17, 2025, Digital Realty announced the pricing of €850 million of 3.875% Guaranteed Notes due 2034 through its subsidiary, Digital Dutch Finco B.V. These Euro Notes are senior unsecured obligations guaranteed by Digital Realty Trust, Inc. and are being sold outside the United States. The proceeds will be used for repaying borrowings, acquiring properties, funding development opportunities, and other corporate purposes, aligning with the company’s REIT status.

The most recent analyst rating on (DLR) stock is a Buy with a $205.00 price target. To see the full list of analyst forecasts on Digital Realty stock, see the DLR Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
Digital Realty’s Subsidiary Offers Euro-Denominated Notes
Neutral
Jun 17, 2025

On June 17, 2025, Digital Dutch Finco B.V., a subsidiary of Digital Realty, initiated an offering of Euro-denominated Guaranteed Notes, which are senior unsecured obligations guaranteed by Digital Realty Trust, Inc. and its operating partnership. The proceeds from this offering are intended for various corporate purposes, including repaying borrowings, acquiring properties, and funding development opportunities, aligning with Digital Realty’s strategy to maintain its REIT status and enhance its operational capabilities.

The most recent analyst rating on (DLR) stock is a Buy with a $205.00 price target. To see the full list of analyst forecasts on Digital Realty stock, see the DLR Stock Forecast page.

Shareholder Meetings
Digital Realty Holds Annual Stockholders Meeting
Neutral
Jun 10, 2025

On June 6, 2025, Digital Realty Trust, Inc. held its Annual Meeting of Stockholders where several proposals were voted on. The stockholders elected directors to serve until the 2026 meeting, ratified KPMG LLP as the accounting firm for 2025, approved executive compensation on an advisory basis, and approved an amended employee stock purchase plan. A stockholder proposal regarding the human right to water was not approved.

The most recent analyst rating on (DLR) stock is a Buy with a $205.00 price target. To see the full list of analyst forecasts on Digital Realty stock, see the DLR Stock Forecast page.

Financial Disclosures
Digital Realty Releases Q1 2025 Financial Results
Neutral
Apr 24, 2025

On April 24, 2025, Digital Realty announced its financial results for the quarter ending March 31, 2025, through a press release and supplemental information available on its website. This announcement provides insights into the company’s financial performance and strategic positioning in the data center industry, which is crucial for stakeholders to assess the company’s operational health and future growth prospects.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 15, 2025