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

Zacks Equity Research

Realty Income Corp. (O) closed at $78.32 in the latest trading session, marking a +0.15% move from the prior day. This change lagged the S&P 500's 1.5% gain on the day. At the same time, the Dow added 1.44%, and the tech-heavy Nasdaq gained 2.1%.

Prior to today's trading, shares of the real estate investment trust had gained 5.45% over the past month. This has outpaced the Finance sector's loss of 1.81% and the S&P 500's gain of 0.54% in that time.

Investors will be hoping for strength from O as it approaches its next earnings release, which is expected to be February 19, 2020. In that report, analysts expect O to post earnings of $0.83 per share. This would mark year-over-year growth of 5.06%. Meanwhile, our latest consensus estimate is calling for revenue of $387.29 million, up 13.05% from the prior-year quarter.

Any recent changes to analyst estimates for O should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.13% lower within the past month. O is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, O is currently trading at a Forward P/E ratio of 22.3. This represents a premium compared to its industry's average Forward P/E of 13.55.

We can also see that O currently has a PEG ratio of 6.07. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The REIT and Equity Trust - Retail was holding an average PEG ratio of 3.8 at yesterday's closing price.

The REIT and Equity Trust - Retail industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 226, which puts it in the bottom 12% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

To follow O in the coming trading sessions, be sure to utilize Zacks.com.


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