As of July 19, 2023, Digital Realty Trust Inc (DLR, Financial) has seen a 3.29% rise in its stock price, reaching $121.17. With a GF Value of $159.82, the company is considered modestly undervalued according to GuruFocus' valuation method. The company's market cap stands at $35.3 billion, with sales reported at $4.9 billion. The EPS is $1.12.
Operating over 300 data centers globally, Digital Realty Trust Inc (DLR, Financial) has nearly 40 million rentable square feet across five continents. The company's offerings range from retail co-location to "cold shells," catering to a diverse range of clients. In recent years, Digital Realty Trust has shifted its focus to providing higher-level service to tenants, moving more into the co-location business and facilitating network and cloud connections.
GF Value of Digital Realty Trust (DLR, Financial)
According to GuruFocus, the GF Value of a stock represents its fair value, calculated based on historical multiples, an internal adjustment factor, and future business performance estimates. If a stock's price significantly exceeds the GF Value Line, it may be overvalued, and future returns might be poor. Conversely, if the price is considerably below the GF Value, the stock could be undervalued, promising higher future returns. With its current price at $121.17 per share, Digital Realty Trust (DLR) is estimated to be modestly undervalued.
Given this undervaluation, the long-term return of Digital Realty Trust's stock is likely to exceed its business growth.
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Financial Strength of Digital Realty Trust
Companies with poor financial strength pose a high risk of permanent capital loss. To avoid this, investors must review a company's financial strength before deciding to purchase shares. The cash-to-debt ratio and interest coverage of a company offer great insight into its financial strength. Digital Realty Trust's cash-to-debt ratio is 0.01, ranking worse than 85.64% of companies in the REITs industry. Its overall financial strength is 3 out of 10, indicating poor financial health.
Profitability of Digital Realty Trust
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. Digital Realty Trust has been profitable for ten out of the past ten years. Over the past twelve months, the company reported a revenue of $4.9 billion and an EPS of $1.12. Its operating margin is 14.24%, ranking worse than 86.96% of companies in the REITs industry. Overall, Digital Realty Trust's profitability is ranked 7 out of 10, indicating fair profitability.
Growth of Digital Realty Trust
One of the most important factors in a company's valuation is its growth. The average annual revenue growth of Digital Realty Trust is 0.9%, ranking better than 50.32% of companies in the REITs industry. The 3-year average EBITDA growth is -8.9%, ranking worse than 73.82% of companies in the REITs industry.
ROIC vs WACC of Digital Realty Trust
Comparing a company's return on invested capital (ROIC) to the weighted average cost of capital (WACC) is another way to assess its profitability. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Digital Realty Trust’s ROIC is 1.58, and its WACC is 6.94.
Conclusion
In conclusion, Digital Realty Trust (DLR, Financial) stock is estimated to be modestly undervalued. The company's financial condition is poor, its profitability is fair, and its growth ranks worse than 73.82% of companies in the REITs industry. To learn more about Digital Realty Trust stock, you can check out its 30-Year Financials here.
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