O Key Financial Metrics & Ratios

Summary

Business

Earnings Call

Valuation

Profitability

Financial Health

10Y annualized return is positive but below market average at 2.5% per year

O has met or exceeded earnings expectations in some recent quarters (1/2)

Reasonable Price-to-Book Ratio

Strong Gross and Operating Profit Margins

Strong Liquidity Ratios

Manageable Debt Levels

📈 Proven Track Record

🏢 Diversified Portfolio

💪 Strong Balance Sheet

🌱 Growth Pipeline

🔍 Strategic Capital Recycling

High Price-to-Earnings Ratio

Expensive Price-to-Sales Ratio

Low Return on Equity

Low Cash Ratio

⚠️ Tenant Credit Concerns

🔒 Uncertainties in Tenant Retention

Overall, Realty Income demonstrates high business quality through its solid track record, diversified portfolio, and strong financial position. However, it faces challenges related to tenant credit quality and potential income volatility. Looking forward, the company has promising growth prospects, with a robust investment pipeline and effective capital recycling strategies, despite some uncertainties regarding tenant retention and economic conditions.

Analysis Date: February 25, 2025
Last Updated: March 12, 2025

+28%

+2.5% per year

Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.

Country US

Exchange NYSE

Industry REIT - Retail

Sector Real Estate

Market Cap $46.38B

CEO Mr. Sumit Roy

Realty Income Corporation, also known as The Monthly Dividend Company, is a company that helps people earn money regularly by owning and renting out properties. They own over 6,500 buildings, like stores and other businesses, and lease them to different companies for long periods. Each month, Realty Income pays its shareholders money from the rent it collects, making it a popular choice for those looking for consistent income. They have a long history of paying these monthly dividends, showing they are reliable in providing income to their investors.

Streams of revenue

All Other Segments: 21%

Convenience Store: 12%

Drug Store: 11%

Restaurants Casual Dining: 10%

Dollar Stores: 8%

Health and Fitness 1: 8%

Theater: 6%

Grocery Stores: 5%

Transportation Service: 5%

Wholesale Club: 3%

Home Improvement: 3%

Beverage: 3%

Financial Services: 3%

General Merchandise: 2%

Geographic Distribution

Other: 0%

Spain: 0%

United States: 0%

United Kingdom: 0%

Estimations for reference only

Core Products

🏢

Office Properties Leasing office spaces

🏬

Retail Properties Leasing retail spaces

📜

Net Lease Agreements Long-term leases

🏭

Industrial Properties Leasing industrial spaces

Business Type

Business to Business

Competitive Advantages

🏢

Diverse Property Portfolio Owning over 6,500 properties across various sectors reduces risk and enhances revenue stability.

📃

Long-Term Lease Agreements The company benefits from long-term leases with commercial clients, providing stable and predictable cash flow.

🤝

Reputation and Brand Trust The company's strong brand as 'The Monthly Dividend Company' fosters trust and loyalty among investors seeking reliable income.

📈

Strong Dividend Track Record Realty Income has a history of 608 consecutive monthly dividends, showcasing its reliability and commitment to returning value to shareholders.

🏆

S&P 500 Dividend Aristocrat Status Being a member of the S&P 500 Dividend Aristocrats index positions Realty Income as a leader in consistent dividend growth, attracting income-focused investors.

Key Business Risks

💼

Economic Downturn A recession could reduce consumer spending, impacting tenants' ability to pay rent and affecting overall profitability.

📉

Market Volatility Fluctuations in the real estate market can impact property values and rental income.

📈

Interest Rate Risk Rising interest rates can increase borrowing costs and make dividend yields less attractive compared to fixed income investments.

⚖️

Regulatory Changes New regulations affecting real estate or REITs could impose additional operational costs or restrictions.

🏚️

Tenant Default Risk Failure of tenants to meet lease obligations can lead to decreased cash flow and dividend payouts.

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Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.

Graham Value Metrics

Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.

Intrinsic Value

Estimated fair value based on Graham's formula

$12.36

Current Market Price: $56.49

IV/P Ratio: 0.22x (>1.0 indicates undervalued)

Margin of Safety

Gap between intrinsic value and market price

-357.0%

Graham recommended a minimum of 20-30% margin of safety

Higher values indicate a greater potential discount to fair value

Graham Criteria Checklist

Benjamin Graham's value investing checklist for O

Positive earnings (5+ years)

Dividend history (5+ years)

P/E ratio ≤ 20 (55.78)

P/B ratio ≤ 1.5 (1.24)

Current ratio ≥ 2.0 (1.68x)

Long-term debt < Net current assets (15.81x)

Margin of safety (-357.0%)

O does not meet all Graham criteria

Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.

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About Profitability Metrics

Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.

Return on Equity (ROE)

Measures how efficiently a company uses its equity to generate profits

2.22%

10% 15%

Higher values indicate better returns for shareholders

TTM (as of 2025-04-30)

Gross Profit Margin

Percentage of revenue retained after accounting for cost of goods sold

72.24%

20% 40%

Higher values indicate better efficiency in production

TTM (as of 2025-04-30)

Net Profit Margin

Percentage of revenue retained after accounting for all expenses

16.28%

8% 15%

Higher values indicate better overall profitability

TTM (as of 2025-04-30)

Strong Gross and Operating Profit Margins

0.7224

Gross Profit Margin

0.6908

Operating Profit Margin

With a gross profit margin of 72.24% and an operating profit margin of 69.08%, the company demonstrates strong operational efficiency and ability to convert sales into profits.

Low Return on Equity

0.0222

Return on Equity

The return on equity of 2.22% is quite low, suggesting that the company is not effectively using its equity base to generate profits.

About Financial Health Metrics

Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.

Debt to Equity Ratio

Total debt divided by total equity

0.69x

1.0x 2.0x

Lower values indicate less financial leverage and risk

Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk

Q4 2024

Current Ratio

Current assets divided by current liabilities

1.68x

1.0x 2.0x

Higher values indicate better short-term liquidity

Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good

Q4 2024

Strong Liquidity Ratios

1.6758

Current Ratio

1.6758

Quick Ratio

The current ratio of 1.68 and quick ratio of 1.68 indicate that the company has adequate short-term assets to cover its short-term liabilities, reflecting good liquidity.

Manageable Debt Levels

0.6889

Debt-to-Equity Ratio

A debt-to-equity ratio of 0.69 indicates a balanced approach to leveraging, suggesting that the company is not overly reliant on debt for financing.

Low Cash Ratio

0.1855

Cash Ratio

A cash ratio of 0.19 indicates limited cash reserves relative to current liabilities, which could signal potential liquidity issues in times of financial stress.

Meeting Expectations

1 /2

Higher values indicate better execution and credibility

📈 Proven Track Record

4.8%

AFFO Growth (2024)

11%

Total Operational Return (30-year average)

Realty Income has achieved 14 consecutive years of growth in AFFO per share, reflecting its strong operational performance. The company averages an 11% total operational return over its 30-year history, with no year posting a negative return, showcasing its reliability and stability.

🏢 Diversified Portfolio

98.7%

Portfolio Occupancy

107.4%

Recapture Rate on Lease Renewals

The company manages a diversified portfolio of over 15,600 properties, with 98.7% occupancy and a strong recapture rate of 107.4% on lease renewals, indicating effective asset management and tenant retention.

💪 Strong Balance Sheet

4.7 times

Fixed Charge Coverage Ratio

5.4 times

Net Debt to EBITDA Ratio

Realty Income maintains a robust balance sheet with a fixed charge coverage ratio of 4.7 times and a net debt to EBITDA ratio of 5.4 times, providing it with ample liquidity and financial flexibility.

⚠️ Tenant Credit Concerns

4.8%

Tenant Watch List Percentage

The company has noted a slight increase in its tenant watch list, now at 4.8%, reflecting a cautious outlook on tenant credit quality amid economic uncertainties.

🌱 Growth Pipeline

$4 billion

Projected Investment Volume (2025)

Realty Income expects to deploy approximately $4 billion in investments in 2025, leveraging a strong pipeline of opportunities across various property types and geographies, including its recent expansion into private capital initiatives.

🔍 Strategic Capital Recycling

$589 million

Net Proceeds from Property Sales (2024)

The company effectively utilizes a capital recycling strategy, with a significant number of property dispositions resulting in proceeds that can be reinvested into higher-quality assets, enhancing growth potential.

🔒 Uncertainties in Tenant Retention

75 basis points

Expected Rent Loss Provision

Potential rent loss of 75 basis points and the impact of a large office tenant move-out raise concerns about short-term income stability, although management views these as opportunities to cycle out underperforming tenants.