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Realty Income Corp. (O) Outpaces Stock Market Gains: What You Should Know

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Zacks Equity Research
·3 min read
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In the latest trading session, Realty Income Corp. (O) closed at $60.16, marking a +1.86% move from the previous day. This change outpaced the S&P 500's 1.61% gain on the day. At the same time, the Dow added 0.77%, and the tech-heavy Nasdaq gained 2.55%.

Coming into today, shares of the real estate investment trust had lost 5% in the past month. In that same time, the Finance sector gained 0.15%, while the S&P 500 lost 0.35%.

Investors will be hoping for strength from O as it approaches its next earnings release, which is expected to be February 22, 2021. On that day, O is projected to report earnings of $0.84 per share, which would represent a year-over-year decline of 2.33%. Meanwhile, our latest consensus estimate is calling for revenue of $417.54 million, up 5.03% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for O. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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 0.37% lower within the past month. O currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that O has a Forward P/E ratio of 16.88 right now. This represents a premium compared to its industry's average Forward P/E of 13.15.

Meanwhile, O's PEG ratio is currently 4.87. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The REIT and Equity Trust - Retail was holding an average PEG ratio of 4.87 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 224, which puts it in the bottom 13% 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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