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

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Zacks Equity Research
·3 min read
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Realty Income Corp. (O) closed at $60.71 in the latest trading session, marking a +0.45% move from the prior day. This change lagged the S&P 500's 1.42% gain on the day. Meanwhile, the Dow gained 0.1%, and the Nasdaq, a tech-heavy index, added 3.69%.

Prior to today's trading, shares of the real estate investment trust had lost 0.76% over the past month. This has lagged the Finance sector's gain of 3.95% and was narrower than the S&P 500's loss of 2.26% in that time.

O will be looking to display strength as it nears its next earnings release. On that day, O is projected to report earnings of $0.82 per share, which would represent a year-over-year decline of 6.82%. Meanwhile, our latest consensus estimate is calling for revenue of $430.27 million, up 3.84% from the prior-year quarter.

O's full-year Zacks Consensus Estimates are calling for earnings of $3.49 per share and revenue of $1.79 billion. These results would represent year-over-year changes of +2.95% and +8.2%, respectively.

Any recent changes to analyst estimates for O should also be noted by investors. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.51% lower. O is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note O's current valuation metrics, including its Forward P/E ratio of 17.34. For comparison, its industry has an average Forward P/E of 16.08, which means O is trading at a premium to the group.

It is also worth noting that O currently has a PEG ratio of 5. 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 2.58 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 192, which puts it in the bottom 25% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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