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TheStreet Open House

Why Realty Income Corp. (O) Stock Is Down Today

NEW YORK (TheStreet) -- Realty Income Corp.  (O) fell on Thursday after the company priced its secondary public offering and increased the number of shares offered.

The company is now offering 12 million shares, up from 10.5 million shares, at $39.96 a share. Bank of America/Merrill Lynch, Morgan Stanley, Wells Fargo, RBC Capital, JPMorgan, Jefferies and UBS acted as joint book running managers for the offering.

The stock was down 1.86% to $40.02 at 10:14 a.m. on Thursday.

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TheStreet Ratings team rates REALTY INCOME CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate REALTY INCOME CORP (O) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • O's very impressive revenue growth greatly exceeded the industry average of 6.8%. Since the same quarter one year prior, revenues leaped by 62.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 64.9% when compared to the same quarter one year prior, rising from $39.02 million to $64.34 million.
  • Net operating cash flow has increased to $173.24 million or 46.88% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.27%.
  • REALTY INCOME CORP has improved earnings per share by 11.8% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, REALTY INCOME CORP reported lower earnings of $0.71 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($0.87 versus $0.71).
  • 46.77% is the gross profit margin for REALTY INCOME CORP which we consider to be strong. Regardless of O's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, O's net profit margin of 29.82% compares favorably to the industry average.
  • You can view the full analysis from the report here: O Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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