Digital Realty Trust, Inc. Quietly Trouncing Wall Street in 2019

Digital Realty Trust, Inc. Quietly Trouncing Wall Street in 2019
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Digital Realty Trust, Inc. Still Has Considerable Upside in Q4 and 2020

Digital Realty Trust, Inc. (NYSE:DLR) is one of those tech stocks that has been quietly rewarding buy-and-hold investors for years.

DLR stock is up approximately 26.5% year-to-date, and its outlook for the remainder of 2019 and beyond looks bullish.

Digital Realty Trust is the “Moneyball” of tech stocks if you will; it doesn’t hit flashy, bat-flipping, home runs, but it’s the kind of company that industry juggernauts like Facebook, Inc. (NASDAQ:FB) and IBM (NYSE:IBM) rely on to keep them operating.

The company continues to report solid quarterly results, acquisitions, and expansion of its international footprint. Thanks to strong market fundamentals and a diverse customer base, Digital Realty Trust stock is poised for massive gains over the coming years.

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DLR Stock Overview

Digital Realty Trust is a real estate investment trust (REIT) that owns, develops, and operates data center facilities around the world.

It owns more than 210 data centers in 14 countries, in 35 metropolitan areas, on five continents. Its international presence includes Asia, Australia, and Europe. (Source: “Data Center Locations,” Digital Realty Trust, Inc., last accessed October 1, 2019.)

It’s not just about having a giant footprint; when it comes to reliability, no one can top Digital Realty Trust. With 16 years of experience (a lifetime in the world of the Internet) it has an industry-leading record of 12 consecutive years of 99.999% uptime. (Source: “Why Digital Realty,” Digital Realty Trust, Inc., last accessed October 1, 2019.)

That’s why its 2,000+ cloud, content, and information technology customers trust their most valued digital assets with Digital Realty.

Two major acquisitions have helped Digital Realty expand its international presence in the past two years.

In September 2017, the company completed a merger with DuPont Fabros Technology, an owner, developer, operator, and manager of  data centers. And in December 2018, Digital Realty completed its acquisition of Ascenty, the leading data center provider in Latin America.

As the eighth-largest publicly traded REIT in the U.S., Digital Realty has a long history of providing income-starved investors with dividend growth.

It has raised its annual dividend for the last 14 consecutive years. Over that time, the company’s dividend increases have grown at a compound annual growth rate of 11%. (Source: “Dividend History,” Digital Realty Trust, Inc., last accessed October 1, 2019.)

Digital Realty currently provides an annual stock dividend of 3.4%.

DLR Stock Information

Market Cap $26.8 Billion
52-Week High $130.10
52-Week Low $100.05
Shares Outstanding 208.3 Million
Float 208.1 Million
50-Day Moving Average $124.75
200-Day Moving Average $120.18

(Source: “Digital Realty Trust, Inc. (DLR),” Yahoo! Finance, last accessed October 1, 2019.)

Digital Realty Trust was, like the broader stock market, bullish in early 2019, fueled by the “January Effect.” While Digital Realty Trust stock was on a bit of a roller coaster ride throughout the summer, it traded in a somewhat tight range.

Since the start of August though, it has been all bullish, with DLR stock breaking through a resistance level near $124.00 and rising 14.6% over the last two months of the third quarter.

Digital Realty Trust stock actually hit a new 52-week high of $130.10 on the last day of the third quarter, setting it up for a surge in the fourth quarter.


Chart courtesy of StockCharts.com

Another Solid Quarter

On July 30, Digital Realty Trust announced its financial results for the second quarter of fiscal 2019 (ended June 30). Second-quarter revenue came in at $801.0 million, a six percent increase year-over-year and a two percent decrease from the previous quarter. (Source: “Digital Realty Reports Second Quarter 2019 Results,” Digital Realty Trust, Inc., July 30 2019.)

Second-quarter net income was $61.0 million and net income available to common stockholders was $32.0 million ($0.15 per diluted share). In the second quarter of 2018, Digital Realty reported earnings per share available to common stockholders of $0.32; in the first quarter of 2019, it reported $0.46.

Second-quarter adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) were $468.0 million, an increase of one percent year-over-year and a three percent decrease sequentially.

The company reported second-quarter 2019 funds from operations (FFO) of $334.0 million ($1.53 per share), compared to $1.64 per share in the same quarter last year and $1.92 in the previous quarter.

During the second quarter, Digital Realty, Inc. closed on the acquisition of 22.5 acres of land in the Paris, Tokyo, Paris, and Northern Virginia metro areas for about $49.0 million.

Also in the second quarter, the company signed bookings that are expected to generate $62.0 million of annualized generally accepted accounting principles (GAAP) rental revenue.

“This positive momentum is a direct reflection of the durability of our diversified global platform and customer base, with strong demand across regions and verticals,” said CEO A. William Stein.

Analyst Take

Digital Realty Trust, Inc. has a market cap of almost $27.0 billion, which means it isn’t exactly a small, under-the-radar stock. But as mentioned earlier, it has been quietly rewarding investors for years.

And thanks to the growth of cloud computing, big data, the Internet of Things, the expected growth in artificial intelligence and autonomous vehicles, and the company’s aggressive acquisition and expansion efforts, Digital Realty Trust stock’s short and long-term outlook remains robust.