Head to Head Analysis: Realty Income (O) and Its Peers

Realty Income (NYSE: O) is one of 76 public companies in the “Commercial REITs” industry, but how does it weigh in compared to its peers? We will compare Realty Income to similar companies based on the strength of its analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Dividends

Realty Income pays an annual dividend of $2.54 per share and has a dividend yield of 4.6%. Realty Income pays out 208.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Commercial REITs” companies pay a dividend yield of 4.0% and pay out 91.3% of their earnings in the form of a dividend. Realty Income has raised its dividend for 21 consecutive years.

Profitability

This table compares Realty Income and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Realty Income 29.37% 5.11% 2.64%
Realty Income Competitors 53.54% 6.60% 3.90%

Earnings and Valuation

This table compares Realty Income and its peers top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Realty Income $1.10 billion $315.57 million 44.84
Realty Income Competitors $537.26 million $100.34 million 422.30

Realty Income has higher revenue and earnings than its peers. Realty Income is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Insider and Institutional Ownership

70.0% of Realty Income shares are held by institutional investors. Comparatively, 73.2% of shares of all “Commercial REITs” companies are held by institutional investors. 0.3% of Realty Income shares are held by insiders. Comparatively, 7.3% of shares of all “Commercial REITs” companies are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Realty Income has a beta of 0.29, meaning that its share price is 71% less volatile than the S&P 500. Comparatively, Realty Income’s peers have a beta of 0.78, meaning that their average share price is 22% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Realty Income and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Realty Income 1 4 3 0 2.25
Realty Income Competitors 635 2587 2228 24 2.30

Realty Income presently has a consensus target price of $66.60, suggesting a potential upside of 21.76%. As a group, “Commercial REITs” companies have a potential upside of 7.28%. Given Realty Income’s higher probable upside, equities research analysts plainly believe Realty Income is more favorable than its peers.

Summary

Realty Income peers beat Realty Income on 11 of the 15 factors compared.

About Realty Income

Realty Income Corporation is a real estate investment trust (REIT). The Company is engaged in in-house acquisition, portfolio management, asset management, credit research, real estate research, legal, finance and accounting, information technology and capital markets capabilities. As of December 31, 2016, the Company owned a diversified portfolio of 4,944 properties located in 49 states and Puerto Rico, with over 83.0 million square feet of leasable space leased to 248 different commercial tenants doing business in 47 separate industries. As of December 31, 2016, of the 4,944 properties in the portfolio, 4,920, or 99.5%, were single-tenant properties, and the remaining were multi-tenant properties. As of December 31, 2016, of the 4,920 single-tenant properties, 4,836 were leased with a weighted average remaining lease term (excluding rights to extend a lease at the option of the tenant) of approximately 9.8 years.

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