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Realty Income (O)
NYSE:O
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Realty Income
(NYSE:O)
80Outperform
Positive Factors
Dividend
Realty Income Corporation's dividend yields 6.0%, which is attractive for income-focused investors.
Financial Health
The company's balance sheet shows a net-debt+preferred to EV ratio slightly below the sector average, indicating strong financial health.
Share Repurchase
Realty Income's newly authorized $2.0B share repurchase program provides support for the shares.
Negative Factors
Earnings Growth
Realty Income's initial FY25 AFFO/sh guidance implies just 1.4% growth, falling short of consensus and peers' growth profiles.
Interest Costs
Interest cost headwinds are limiting AFFO per share growth.
Tenant Concentration
Tenant concentrations are increasing, with Realty Income deriving more than a quarter of its rents from C-stores, grocers, and dollar stores, raising concerns about diversification.
Realty Income (O) vs. S&P 500 (SPY)
Market Cap
$48.14B
Dividend Yield5.8%
Average Volume (3M)6.97M
Price to Earnings (P/E)55.1
Beta (1Y)0.36
Revenue Growth29.49%
EPS Growth-22.38%
CountryUS
Employees468
SectorReal Estate
Sector Strength86
IndustryREIT - Retail
Share Statistics
EPS (TTM)0.98
Shares Outstanding891,769,170
10 Day Avg. Volume8,378,699
30 Day Avg. Volume6,966,766
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)9.44
Price to Cash Flow (P/CF)12.80
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
$60.68Price Target Upside12.06% Upside
Rating ConsensusHold
Number of Analyst Covering11
Realty Income Business Overview & Revenue Model
Company DescriptionRealty Income Corporation, often referred to as 'The Monthly Dividend Company,' is a real estate investment trust (REIT) that specializes in acquiring and managing freestanding, single-tenant commercial properties in the United States and internationally. The company's portfolio primarily consists of retail, industrial, and office properties leased to commercial tenants under long-term, net lease agreements. Realty Income is known for its focus on generating dependable monthly income for its shareholders, supported by a diversified portfolio of high-quality real estate assets.
How the Company Makes MoneyRealty Income makes money primarily through leasing its properties to commercial tenants under long-term, triple-net lease agreements. In these agreements, tenants are responsible for paying property taxes, insurance, and maintenance costs, which minimizes the landlord's operational expenses and provides a stable and predictable income stream. The company strategically acquires properties with creditworthy tenants in various sectors, including retail, industrial, and office, ensuring a diversified and resilient portfolio. Additionally, Realty Income may engage in opportunistic property sales and reinvest the proceeds into new acquisitions to optimize its portfolio. The company's revenue model is further enhanced by its disciplined approach to capital allocation and financing, including the issuance of debt and equity, which supports its growth and dividend distribution strategies.
Realty Income Financial Statement Overview
Summary
Realty Income shows robust revenue growth and strong margins, with efficient cost management and operational effectiveness. The balance sheet is stable with improved debt-to-equity metrics, and cash flow generation is strong, albeit impacted by a decline in net income. Overall, the company maintains a solid financial position with room for profitability improvement.Income Statement
Realty Income has demonstrated a solid revenue growth trajectory, with a substantial increase from $1,491 million in 2019 to $5,271 million in 2024. Gross and EBIT margins are exceptionally strong, consistently above 95% and 90%, respectively, indicating efficient cost management and operational effectiveness. However, the decline in net income from 2023 to 2024 suggests potential challenges in profitability despite revenue growth.85
Very Positive
Balance Sheet
The company's balance sheet shows a robust equity position with a steadily increasing stockholders' equity, reaching $38,840 million in 2024. The debt-to-equity ratio has improved significantly, with no total debt reported in 2024, enhancing financial stability. The equity ratio stands at 56.4% in 2024, reflecting a strong asset base primarily financed through equity, minimizing leverage-related risks.80
Positive
Cash Flow
Operating cash flow has shown consistent growth, reaching $3,573 million in 2024, supporting the company's ability to generate cash from operations. The free cash flow growth is impressive, with a strong free cash flow of $3,573 million recorded in 2024. The operating cash flow to net income ratio is healthy, indicating efficient conversion of earnings into cash, although the decline in net income affects overall cash flow efficiency.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.27B | 4.08B | 3.34B | 2.08B | 1.65B | Gross Profit |
| 5.27B | 3.76B | 3.12B | 1.95B | 1.55B | EBIT |
| 5.09B | 3.62B | 1.26B | 963.10M | 873.00M | EBITDA |
| 3.33B | 3.60B | 2.93B | 1.86B | 1.55B | Net Income Common Stockholders |
| 860.77M | 872.31M | 869.41M | 359.46M | 395.49M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 444.96M | 232.92M | 171.10M | 258.58M | 824.48M | Total Assets |
| 68.84B | 57.78B | 49.67B | 43.14B | 20.74B | Total Debt |
| 26.76B | 21.99B | 19.49B | 15.44B | 8.82B | Net Debt |
| 26.31B | 21.76B | 19.32B | 15.18B | 7.99B | Total Liabilities |
| 29.78B | 24.67B | 20.83B | 18.01B | 9.72B | Stockholders Equity |
| 38.84B | 32.94B | 28.71B | 25.05B | 10.99B |
| Cash Flow | Free Cash Flow | |||
| 3.57B | 2.96B | 2.47B | 1.30B | 1.11B | Operating Cash Flow |
| 3.57B | 2.96B | 2.56B | 1.32B | 1.12B | Investing Cash Flow |
| -3.34B | -9.35B | -8.39B | -6.44B | -2.03B | Financing Cash Flow |
| -21.16M | 6.44B | 5.74B | 4.58B | 1.69B |
Realty Income Technical Analysis
Negative
54.15
Price Trends
55.56
Negative
54.67
Negative
56.21
Negative
Market Momentum
0.29
Negative
56.17
Neutral
63.51
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For O, the sentiment is Negative. The current price of 54.15 is below the 20-day moving average (MA) of 55.76, below the 50-day MA of 55.56, and below the 200-day MA of 56.21, indicating a bearish trend. The MACD of 0.29 indicates Negative momentum. The RSI at 56.17 is Neutral, neither overbought nor oversold. The STOCH value of 63.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for O.
Realty Income Risk Analysis
Realty Income disclosed 34 risk factors in its most recent earnings report. Realty Income 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
Realty Income Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $48.14B | 55.12 | 2.40% | 5.80% | 29.49% | -22.38% | |
79 Outperform | $7.37B | 18.22 | 9.32% | 5.88% | 4.97% | -0.26% | |
76 Outperform | $7.81B | 26.42 | 9.58% | 4.85% | 6.21% | 22.32% | |
71 Outperform | $12.72B | 32.97 | 5.82% | 3.95% | 10.15% | 3.36% | |
68 Neutral | $13.70B | 36.50 | 4.03% | 4.86% | 14.51% | -45.53% | |
63 Neutral | $57.75B | 20.30 | 80.78% | 5.38% | 5.40% | 8.57% | |
61 Neutral | $4.30B | 16.20 | -3.61% | 11.22% | 6.29% | -21.37% |
* Real Estate Sector Average
Performance Comparison
O
Realty Income
54.15
4.75
9.62%
KIM
Kimco Realty
19.77
2.61
15.21%
NNN
National Retail Properties
39.07
0.23
0.59%
REG
Regency Centers
68.42
12.47
22.29%
SPG
Simon Property
147.69
7.92
5.67%
FRT
Federal Realty
88.96
-6.72
-7.02%
Realty Income Earnings Call Summary
Earnings Call Date: Feb 24, 2025 | % Change Since: -4.63% | Next Earnings Date: May 5, 2025
Earnings Call Sentiment Positive
Realty Income's earnings call demonstrated a strong performance in 2024, characterized by consistent AFFO growth, high portfolio occupancy, and a robust investment pipeline. The company also showcased its strategic capital recycling and sale-leaseback transactions. However, challenges such as a modest AFFO growth outlook for 2025 and potential tenant credit issues were also noted. Overall, the positive highlights outweigh the lowlights, indicating a strong position moving forward.Highlights
Consistent AFFO Growth and Dividend Yield
Realty Income achieved a 4.8% AFFO per share growth in 2024, marking the fourteenth consecutive year of growth, alongside a 5.4% dividend yield, resulting in a total operational return of 10.2% for the year.
Strong Investment Activity
Invested $3.9 billion in 2024 at a 7.4% weighted average initial cash yield with a 243 basis points investment spread, exceeding the historical average of 150 basis points.
High Portfolio Occupancy
Maintained a portfolio occupancy rate of 98.7% by the end of the fourth quarter, in line with the prior quarter.
Successful Capital Recycling Strategy
Sold 80 properties for net proceeds of $138 million in Q4, with full-year net proceeds of $589 million from 294 properties.
Robust Pipeline for 2025
Forecasted approximately $4 billion in investment volume for 2025 based on current investment spreads and visibility to the deal pipeline.
Significant Sale-Leaseback Transaction
Closed a $770 million sale-leaseback transaction with 7-Eleven, marking the sixth such transaction with the company.
Strong Balance Sheet and Liquidity
Ended the year with $3.7 billion of liquidity, including $445 million in cash, and maintained a low exposure to variable rate debt at 4.2%.
Lowlights
AFFO Growth Outlook for 2025
Expected AFFO per share growth for 2025 is lower at 1.4% at the midpoint, with a $0.04 negative impact from potential rent loss and tenant moves.
Potential Tenant Credit Issues
Provision for 75 basis points of potential rent loss in 2025, primarily affecting three tenants from previous M&A transactions.
Higher Income Tax Expense
Income tax expense for 2025 is expected to be higher due to increased activity in the UK, with an anticipated run rate of $80 to $90 million.
Company Guidance
In the Realty Income Fourth Quarter 2024 Earnings Conference Call, the company reported a 4.8% growth in adjusted funds from operations (AFFO) per share for the year, marking the fourteenth consecutive year of growth. The company delivered a total operational return of 10.2% for the year, with a 5.4% dividend yield for investors. Realty Income invested $3.9 billion at a 7.4% weighted average initial cash yield, achieving a 243 basis points investment spread, which surpassed the historical average of 150 basis points. The fourth quarter saw an AFFO per share growth of 4% to $1.05, with $1.7 billion invested at a 7.1% weighted average initial cash yield. Approximately 57% of the annualized cash income was generated from investment-grade clients. The company maintained a high portfolio occupancy rate of 98.7% and achieved a recapture rate of 107.4% on 266 lease renewals, generating $52 million in new annualized cash rent. Realty Income's strategic position, financial discipline, and diversified portfolio continue to provide stability and long-term growth, with expectations of $4 billion in investment volume for 2025. The company also announced a $2 billion common stock repurchase program, intended to be leverage neutral.Realty Income Corporate Events
Stock BuybackDividendsFinancial Disclosures
Realty Income Announces 2024 Financial Results and Dividend Increase
Positive
Feb 24, 2025
On February 24, 2025, Realty Income Corporation announced its financial results for the year ending December 31, 2024, highlighting a 4.8% increase in Adjusted Funds from Operations (AFFO) per share, marking the 14th consecutive year of growth. The company invested $3.9 billion in 2024 and raised $1.8 billion through stock sales, maintaining a strong portfolio occupancy rate of 98.7%. The Board authorized a $2.0 billion share repurchase program, and the company announced a dividend increase, reflecting its commitment to delivering long-term returns to shareholders.
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.