A look at the company's recent quarterly results, dividend history and valuation
Shares of Digital Realty Trust Inc. (NYSE:DLR) have fallen
more than 19% from the 52-week high, placing the stock on the doorstep of bear
market territory. Digital Realty's results throughout last year were weaker in
terms of funds from operation compared to the previous year, but not so much to
warrant such a steep decline in a short period of time. In fact, the
year-over-year declines were due to a much larger share count then any weakness
in the trust's business.
Let's look at Digital Realty's most recent quarter and
valuation to see why I find the stock more attractive as it declines.
Recent earnings results
Digital Realty reported fourth-quarter and full-year results
on Feb. 11. The company produced revenue growth of 35% to $1.06 billion, which
was $35.1 million ahead of Wall Street analysts' estimates. Much of the
year-over-year growth was due to the acquisition of European cloud data center
company Interxion that was completed on March 13, 2020. On a sequential basis,
revenue improved 3.7%. Core funds from operations totaled $465 million, or
$1.61 per share, compared to $355 million, or $1.62 per share, in the previous
year. A 32% increase in the share count resulting from acquisitions was the
reason behind the decline in funds from operations per share from the prior
year. Funds from operations was 8 cents better than analysts had expected. The
trust's portfolio occupancy rate improved 40 basis points to just over 90%,
with all three regions showing at least 90% occupancy rates.
For 2020, revenue improved almost 22% to $3.9 billion. Core
funds from operations totaled $1.7 billion, or $6.22 per share. This topped
Digital Realty's guidance, but was a 6.5% decrease from the prior year. Once
again, a higher share count was the culprit for the decrease.
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