Division One Finance is Initiating Coverage on Digital Realty Trust ($DLR)
As of today we will be beginning coverage on the specialty REIT company Digital RealtyTrust ($DLR). They support the world's leading enterprises and service providers by delivering the full spectrum of data center, colocation and interconnection solutions. Digital Realty's global data center footprint has more than 284 facilities in 48 metros across 23 countries on six continents.
Some of their clients include Amazon Web Services, Verizon, Adobe, LinkedIn and Google Cloud. As cloud infrastructure becomes more needed across the globe this should continue to provide growth opportunities for the company as well.?
Digital Realty has not been negative free cash flow since 2012, and has increased their free cash flow every year since 2017. They have also managed to increase revenue every year since 2018 without the use of Capex, which shows the company operates efficiently and makes great use of its current assets. Their asset turnover ratio is around 12% on average over the past 4 years.?
The company currently has $3.69 of debt for every dollar of sales, indicating a 27% turnover rate on current long term debt. Rising interest rates have not yet affected the long term value of the stock in a way that is detrimental to the company’s short term growth. Fair value for the stock is still above the current share price with an average target of $177. Our lowest price target for the stock sits at $102.74.?
The majority of their $4+ billion in revenue consists of rental income generated by the data centers in their portfolio. They currently have 36.5 million rentable square feet and an 83.6% occupancy rate. Total operating revenues increased by approximately $524.3 million for the year ended December 31, 2021. Their stock has delivered a 207.26% total return over the past 10 years.?