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Realty Income Corp. (O) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, Realty Income Corp. (O) closed at $78.40, marking a +0.76% move from the previous day. This change lagged the S&P 500's 1.42% gain on the day. At the same time, the Dow added 1.42%, and the tech-heavy Nasdaq gained 1.4%.

Prior to today's trading, shares of the real estate investment trust had gained 3.75% over the past month. This has outpaced the Finance sector's gain of 1.72% and the S&P 500's gain of 0.38% in that time.

O will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.83, up 2.47% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $374.14 million, up 10.67% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.29 per share and revenue of $1.48 billion, which would represent changes of +3.13% and +11.41%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for O. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.17% higher within the past month. O currently has a Zacks Rank of #3 (Hold).

Digging into valuation, O currently has a Forward P/E ratio of 23.67. This represents a premium compared to its industry's average Forward P/E of 14.14.

Meanwhile, O's PEG ratio is currently 6.11. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The REIT and Equity Trust - Retail was holding an average PEG ratio of 3.6 at yesterday's closing price.

The REIT and Equity Trust - Retail industry is part of the Finance sector. This group has a Zacks Industry Rank of 72, putting it in the top 29% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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