Why Digital Realty Trust (DLR) Stock Is Higher Today

NEW YORK (TheStreet) -- Shares of Digital Realty Trust (DLR) are up 2.38% to $57.98 in early trading on Monday after Jefferies (JEF) upgraded its rating to "buy" from "hold."

Jefferies also raised its price target to $68.00 from $55.00 as it becomes "bullish on the sector again," according to its research note.

Must Read: Warren Buffett's 25 Favorite Growth Stocks

TheStreet Ratings team rates DIGITAL REALTY TRUST INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DIGITAL REALTY TRUST INC (DLR) a BUY. This is driven by several positive factors, 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 revenue growth, reasonable valuation levels, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 9.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $116.41 million or 30.73% when compared to the same quarter last year. In addition, DIGITAL REALTY TRUST INC has also modestly surpassed the industry average cash flow growth rate of 30.47%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, DIGITAL REALTY TRUST INC's return on equity is below that of both the industry average and the S&P 500.
  • DIGITAL REALTY TRUST INC's earnings per share declined by 23.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DIGITAL REALTY TRUST INC increased its bottom line by earning $2.10 versus $1.47 in the prior year. For the next year, the market is expecting a contraction of 53.3% in earnings ($0.98 versus $2.10).
  • You can view the full analysis from the report here: DLR Ratings Report
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