DLR - Embedded Expectations Analysis - 2019 06 21
Digital Realty Trust, Inc. (DLR:USA) currently trades at a historical high relative to UAFRS-based (Uniform) Earnings, with a 45.4x UAFRS-based P/E, implying bullish expectations for the firm. However, management has concerns about financing agreements, market conditions, and their international expansion.Specifically, management may be concerned about bad debt expense as a proportion of revenue, their data center green Euro bond, and softness in the European market. Furthermore, they may be exaggerating their commitment to sustainability, improvements in market conditions, and their utility to digital health channel partners. In addition, they may lack confidence in their ability to scale their platform globally, identify M&A opportunities, and maintain risk-adjusted returns. Lastly, they may be concerned about their entrance into Chile, the launch of their Tokyo campus, and about the lull in the purchasing cycle of CSPs.
Digital Realty Trust is a real estate investment trust. The company is a global provider of data center, colocation and interconnection solutions for customers across a variety of industry verticals ranging from cloud and information technology services, communications and social networking to financial services, manufacturing, energy, healthcare, and consumer products. The company's Operating Partnership, Digital Realty Trust, L.P., is the entity through which the company conducts its business of owning, acquiring, developing and operating data centers. The company's portfolio of data centers provides available environments for the exchange, processing and storage of electronic information.
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