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

Zacks Equity Research
·3-min read

In the latest trading session, Realty Income Corp. (O) closed at $67.02, marking a +0.15% move from the previous day. This move lagged the S&P 500's daily gain of 0.36%.

Heading into today, shares of the real estate investment trust had gained 2.32% over the past month, outpacing the Finance sector's gain of 1% and lagging the S&P 500's gain of 5.21% in that time.

Wall Street will be looking for positivity from O as it approaches its next earnings report date. This is expected to be May 3, 2021. The company is expected to report EPS of $0.85, down 3.41% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $430.41 million, up 3.88% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.48 per share and revenue of $1.8 billion. These totals would mark changes of +2.65% and +8.73%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for O. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.04% higher. O currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, O is holding a Forward P/E ratio of 18.7. This valuation marks a premium compared to its industry's average Forward P/E of 16.03.

It is also worth noting that O currently has a PEG ratio of 4.99. 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. O's industry had an average PEG ratio of 3.43 as of yesterday's close.

The REIT and Equity Trust - Retail industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 161, which puts it in the bottom 37% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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