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Digital Realty (DLR)
NYSE:DLR
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Digital Realty
(NYSE:DLR)
Rating:71Outperform
Price Target:
$186.00
▲(11.90% Upside)
Positive Factors
Demand and Leasing
Digital Realty Trust management highlighted a record demand pipeline and reiterated the potential for future record leasing, which is viewed positively.
Industry Position
DLR is clearly a leader in its industry, and is expected to benefit from industry growth as well as consolidation.
Strategic Expansion
Digital Realty has been enhancing its global footprint via strategic mergers and acquisitions over the years.
Negative Factors
Customer In-Sourcing Risk
Hyperscale cloud providers, the largest existing tenants of data centres, may opt to move all or significant data centre servers in-house.
Foreign Exchange Risk
Around 45% of Digital Realty's revenue is contributed by markets with foreign exchange rate risk.
Valuation Concerns
Despite the attractive market demand setup, the valuation is considered rich given growth relative to expectations.
Digital Realty (DLR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$57.73B
Dividend Yield2.94%
Average Volume (3M)1.35M
Price to Earnings (P/E)44.4
Beta (1Y)0.78
Revenue Growth5.64%
EPS Growth12.49%
CountryUS
Employees3,936
SectorReal Estate
Sector Strength48
IndustryREIT - Office
Share Statistics
EPS (TTM)2.94
Shares Outstanding341,050,450
10 Day Avg. Volume1,257,992
30 Day Avg. Volume1,352,200
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.37
Enterprise Value/Revenue13.72
Enterprise Value/Gross Profit24.87
Enterprise Value/Ebitda21.49
Forecast
1Y Price Target
$193.94Price Target Upside16.68% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering20
Digital Realty Business Overview & Revenue Model
Company DescriptionDigital Realty (DLR) is a leading global provider of data center, colocation, and interconnection solutions. The company operates a vast network of data centers across North America, Europe, Asia, and Australia, catering to a diverse range of industries including cloud computing, financial services, and telecommunications. Digital Realty's core offerings include secure and reliable data center facilities, colocation services that allow customers to rent space for their servers, and interconnection services that facilitate high-speed connectivity between networks and data centers.
How the Company Makes MoneyDigital Realty generates revenue primarily through leasing data center space to customers, which includes colocation and interconnection services. The company operates on a long-term lease model, typically securing multi-year contracts with its clients, which provides stable and predictable cash flows. Key revenue streams include monthly rental income from colocation services, as well as fees for interconnection services that allow clients to connect their infrastructure with other networks and service providers. Significant partnerships with major cloud service providers and telecommunications companies also contribute to its earnings, as these relationships drive demand for Digital Realty's data center solutions. Additionally, the company benefits from a growing market for data storage and processing, driven by increasing data consumption and digital transformation trends across various sectors.
Digital Realty Earnings Call Summary
Earnings Call Date:Jul 24, 2025
(Q2-2025)
| % Change Since: -7.67%|
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong performance in new bookings, core FFO growth, and successful fundraising for the U.S. Hyperscale Data Center Fund. The company also demonstrated progress in sustainability initiatives. However, the call acknowledged challenges related to currency and refinancing headwinds, high development CapEx, and geopolitical uncertainties.Q2-2025 Updates
Positive Updates
Record New Bookings and Interconnection Growth
Digital Realty posted $177 million of new bookings in the quarter, including $135 million at Digital Realty's share. The company achieved record performance in the 0-1 megawatt plus interconnection product set with $90 million of bookings, which is 18% higher than the prior record set two quarters ago.
Increase in Core FFO and Guidance
Core FFO surged to a record $1.87 per share, a 13% increase over last year and 6% higher than last quarter. This contributed to an increase in revenue, adjusted EBITDA, and core FFO per share guidance for the full year 2025.
Strong Liquidity Position
The company highlighted a robust balance sheet with more than $7 billion of liquidity and below target leverage, positioning it well for future growth.
Success in U.S. Hyperscale Data Center Fund
Digital Realty received over $3 billion of LP equity commitments for its U.S. Hyperscale Data Center Fund, exceeding targets and demonstrating strong investor interest.
Expanded Sustainability Initiatives
Digital Realty expanded its renewable energy supplies, with 185 data centers now matched with 100% renewable energy. The company achieved a 9% increase in renewable energy usage and a 14% reduction in water usage intensity in 2024.
Negative Updates
Currency and Debt Refinancing Headwinds
Digital Realty faced a 325-basis point refinancing headwind beginning in the third quarter due to paying off maturing eurobonds. Additionally, there was a mention of FX impacts on financial results.
High Development CapEx
The company spent over $900 million on development CapEx on a gross basis during the quarter, reflecting ongoing high capital expenditures for development, which could impact financial flexibility.
Geopolitical and Macroeconomic Uncertainties
A bad debt reserve was associated with broader macroeconomic and geopolitical factors, impacting financial performance.
Company Guidance
During the Digital Realty Second Quarter 2025 Earnings Call, the company provided a positive outlook for the remainder of the year and beyond. The firm increased its core FFO per share guidance for 2025 to a range of $7.15 to $7.25, reflecting a 7% year-over-year growth. This was driven by record-breaking $177 million in new bookings, including $135 million at Digital Realty's share, particularly strong in the 0-1 megawatt plus interconnection category, which reached $90 million, an 18% increase over the previous record. The company also achieved a record core FFO of $1.87 per share for the quarter, marking a 13% increase from the previous year. Digital Realty's backlog stands at $826 million, providing strong visibility through 2025 and into 2026. Additionally, the firm highlighted its robust balance sheet with over $7 billion of liquidity and below-target leverage, along with successful capital commitments exceeding $3 billion for its U.S. Hyperscale Data Center Fund. These factors collectively contribute to Digital Realty's extended runway for sustained long-term growth.Digital Realty Financial Statement Overview
Summary
Digital Realty demonstrates strong financial health with consistent revenue growth, robust profitability, and effective cash flow management. The balance sheet is stable, though there is potential to enhance equity returns. Overall, the company is well-positioned for continued growth and stability in the REIT - Office industry.Income Statement
Digital Realty shows a steady revenue growth rate of 2.42% TTM, with a strong net profit margin of 23.98% and an EBIT margin of 16.09%. However, the gross profit margin has decreased from previous years, indicating potential cost pressures. Overall, the company demonstrates solid profitability and growth in the TTM period.75
Positive
Balance Sheet
The company maintains a moderate debt-to-equity ratio of 0.86, reflecting a balanced approach to leverage. Return on equity is modest at 6.37%, suggesting efficient use of equity capital. The equity ratio stands at 47.05%, indicating a stable capital structure. While the balance sheet is stable, there is room for improvement in equity returns.70
Positive
Cash Flow
Digital Realty exhibits a significant free cash flow growth rate of 43.78% TTM, indicating strong cash generation capabilities. The operating cash flow to net income ratio of 0.67 and a free cash flow to net income ratio of 1.0 highlight efficient cash flow management. The cash flow position is robust, supporting future growth and stability.80
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.77B | 5.55B | 5.48B | 4.69B | 4.43B | 3.90B |
| Gross Profit | 3.18B | 3.04B | 2.88B | 2.67B | 2.65B | 2.39B |
| EBITDA | 3.68B | 2.87B | 3.16B | 2.29B | 3.60B | 2.10B |
| Net Income | 1.38B | 602.49M | 948.84M | 377.68M | 1.71B | 369.06M |
Balance Sheet | ||||||
| Total Assets | 48.71B | 45.28B | 44.11B | 41.48B | 36.37B | 36.08B |
| Cash, Cash Equivalents and Short-Term Investments | 3.55B | 3.87B | 1.63B | 141.77M | 142.70M | 108.50M |
| Total Debt | 19.75B | 18.01B | 18.97B | 18.07B | 14.96B | 14.77B |
| Total Liabilities | 23.85B | 22.11B | 23.12B | 21.86B | 17.85B | 17.59B |
| Stockholders Equity | 22.91B | 21.34B | 19.12B | 17.58B | 18.00B | 17.72B |
Cash Flow | ||||||
| Free Cash Flow | 2.38B | 2.26B | 1.63B | -983.71M | -818.54M | -472.14M |
| Operating Cash Flow | 2.38B | 2.26B | 1.63B | 1.66B | 1.70B | 1.71B |
| Investing Cash Flow | -2.37B | -1.91B | -1.12B | -4.70B | -1.06B | -2.60B |
| Financing Cash Flow | 1.55B | 2.06B | 963.47M | 2.97B | -590.63M | 935.69M |
Digital Realty Technical Analysis
Negative
166.22
Price Trends
173.77
Negative
165.03
Positive
167.65
Negative
Market Momentum
-1.57
Positive
34.83
Neutral
17.24
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 166.22 is below the 20-day moving average (MA) of 174.00, below the 50-day MA of 173.77, and below the 200-day MA of 167.65, indicating a bearish trend. The MACD of -1.57 indicates Positive momentum. The RSI at 34.83 is Neutral, neither overbought nor oversold. The STOCH value of 17.24 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 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 (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $4.53B | 20.57 | 4.06% | 5.58% | 2.26% | 10.15% | |
71 Outperform | $57.73B | 44.36 | 6.37% | 2.94% | 5.64% | 12.49% | |
70 Outperform | $12.75B | 102.63 | -0.12% | 7.02% | 3.12% | -116.29% | |
68 Neutral | $4.64B | 74.76 | 1.30% | 4.64% | 13.07% | -4.94% | |
63 Neutral | $6.82B | 13.27 | -0.71% | 7.18% | 3.67% | -27.43% | |
61 Neutral | $7.69B | 9.11 | 14.93% | 1.96% | 1.38% | 4370.96% | |
57 Neutral | $11.08B | 3,215.66 | 0.07% | 5.98% | 3.24% | -97.73% |
* Real Estate Sector Average
Performance Comparison
DLR
Digital Realty
168.58
23.08
15.86%
ARE
Alexandria Equities
74.51
-34.22
-31.47%
BXP
Boston Properties
65.21
-0.73
-1.11%
CUZ
Cousins Properties
28.22
2.13
8.16%
KRC
Kilroy Realty
38.33
6.67
21.07%
VNO
Vornado Realty
37.81
6.52
20.84%
Digital Realty Corporate Events
Financial Disclosures
Digital Realty Releases Q2 2025 Financial Results
Neutral
Jul 24, 2025
On July 24, 2025, Digital Realty announced its financial results for the quarter ending June 30, 2025. The company released a press statement and supplemental information on its website, detailing key financial data and operational highlights. This announcement is significant for stakeholders as it provides insights into the company’s performance and strategic positioning in the data center industry.
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 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.
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.