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Digital Realty Trust (DLR)
:DLR
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Digital Realty
(NYSE:DLR)
Rating:76Outperform
Price Target:
$189.00
▲( 12.42% Upside)
Positive Factors
AI Demand
The AI explosion and demand windfall, along with pricing power remaining firm, have allowed Digital Realty Trust to capitalize on overall sector demand.
Financial Performance
Strong 1Q25 results and 2025 guidance increased with results beating both BofA and Street estimates on Core FFO/sh and adj. EBITDA.
Negative Factors
Historical Challenges
Past challenges included dilutive M&A, high leverage, and poor releasing trends that affected management and Core FFO/sh growth.
Digital Realty (DLR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$56.62B
Dividend Yield2.9%
Average Volume (3M)1.78M
Price to Earnings (P/E)156.3
Beta (1Y)0.86
Revenue Growth2.96%
EPS Growth-68.06%
CountryUS
Employees3,936
SectorReal Estate
Sector Strength64
IndustryREIT - Office
Share Statistics
EPS (TTM)0.27
Shares Outstanding336,791,500
10 Day Avg. Volume1,447,050
30 Day Avg. Volume1,780,673
Financial Highlights & Ratios
PEG Ratio-5.90
Price to Book (P/B)2.63
Price to Sales (P/S)0.00
P/FCF Ratio33.94
Enterprise Value/Market Cap0.95
Enterprise Value/Revenue2.43
Enterprise Value/Gross Profit20.11
Enterprise Value/Ebitda5.23
Forecast
1Y Price Target
$187.56Price Target Upside11.56% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering17
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 steady revenue growth and strong operational margins, crucial for sustaining its business model in the REIT sector. While profitability ratios have shown some decline, the company's balance sheet remains stable with moderate leverage. The cash flow statement indicates strong cash generation capabilities, essential for ongoing operations and investments.Income Statement
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.72
Positive
Balance Sheet
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.65
Positive
Cash Flow
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.78
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 5.63B | 5.55B | 5.48B | 4.69B | 4.43B | 3.90B | Gross Profit |
| 2.67B | 3.04B | 2.88B | 2.69B | 2.67B | 2.40B | EBIT |
| 712.62M | 471.86M | 524.46M | 589.97M | 694.01M | 557.53M | EBITDA |
| 2.70B | 1.87B | 3.16B | 2.24B | 2.25B | 2.04B | Net Income Common Stockholders |
| 151.72M | 602.49M | 948.84M | 377.68M | 1.71B | 356.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.19B | 3.87B | 1.63B | 141.77M | 142.70M | 108.50M | Total Assets |
| 42.63B | 45.28B | 44.11B | 41.48B | 36.37B | 36.08B | Total Debt |
| 18.38B | 18.01B | 18.97B | 18.07B | 14.96B | 14.77B | Net Debt |
| 17.18B | 14.14B | 17.34B | 17.93B | 14.82B | 14.66B | Total Liabilities |
| 21.79B | 22.11B | 23.12B | 21.86B | 17.85B | 17.59B | Stockholders Equity |
| 19.02B | 21.34B | 19.12B | 17.58B | 18.00B | 17.72B |
| Cash Flow | Free Cash Flow | ||||
| 1.65B | 2.26B | 1.63B | -983.71M | -818.54M | -472.14M | Operating Cash Flow |
| 2.31B | 2.26B | 1.63B | 1.66B | 1.70B | 1.71B | Investing Cash Flow |
| -2.82B | -1.91B | -1.12B | -4.70B | -1.06B | -2.60B | Financing Cash Flow |
| 1.86B | 2.06B | 963.47M | 2.97B | -590.63M | 935.69M |
Digital Realty Technical Analysis
Positive
168.12
Price Trends
154.81
Positive
159.95
Positive
162.86
Positive
Market Momentum
4.01
Positive
63.73
Neutral
50.67
Neutral
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 168.12 is above the 20-day moving average (MA) of 166.03, above the 50-day MA of 154.81, and above the 200-day MA of 162.86, indicating a bullish trend. The MACD of 4.01 indicates Positive momentum. The RSI at 63.73 is Neutral, neither overbought nor oversold. The STOCH value of 50.67 is Neutral, 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 2 New Risks
1.
We and our third-party providers are vulnerable to cyberattacks and security breaches that could materially disrupt or compromise our operations, data and results. Q4, 2024
2.
Our contracts with our customers could subject us to significant liability. Q4, 2024
Digital Realty Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $84.46B | 89.71 | 7.08% | 2.02% | 6.36% | -3.54% | |
76 Outperform | $56.62B | 156.29 | 2.14% | 2.90% | 2.96% | -68.06% | |
71 Outperform | $2.05B | 34.51 | 10.58% | 0.37% | -56.43% | -82.25% | |
70 Outperform | $24.66B | 30.38 | -14.67% | 1.77% | -0.29% | 47.83% | |
69 Neutral | $28.39B | 234.49 | -35.81% | 2.99% | 11.04% | -37.29% | |
60 Neutral | $2.76B | 10.33 | 0.49% | 8508.28% | 5.95% | -17.56% | |
57 Neutral | $43.51B | 33.81 | -198.54% | 6.26% | -12.57% | -375.80% |
* Real Estate Sector Average
Performance Comparison
DLR
Digital Realty
168.12
28.70
20.59%
DBRG
DigitalBridge Group
11.18
-1.96
-14.92%
CCI
Crown Castle
100.16
8.30
9.04%
EQIX
Equinix
863.46
110.30
14.64%
IRM
Iron Mountain
96.21
18.99
24.59%
SBAC
SBA Communications
229.52
45.74
24.89%
Digital Realty Earnings Call Summary
Earnings Call Date:Apr 24, 2025
(Q1-2025)
| % Change Since: 9.35%|
Next Earnings Date:Jul 24, 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 Corporate Events
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
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.