Realty Income Debt

O Stock  USD 52.88  0.22  0.41%   
Realty Income Corp holds a debt-to-equity ratio of 0.628. At this time, Realty Income's Short and Long Term Debt Total is very stable compared to the past year. As of the 20th of June 2024, Net Debt is likely to grow to about 22.8 B, while Short and Long Term Debt is likely to drop about 726.2 M. With a high degree of financial leverage come high-interest payments, which usually reduce Realty Income's Earnings Per Share (EPS).

Asset vs Debt

Equity vs Debt

Realty Income's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Realty Income's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Realty Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Realty Income's stakeholders.

Realty Income Quarterly Net Debt

26.93 Billion

For most companies, including Realty Income, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Realty Income Corp, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Realty Income's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book
1.3599
Book Value
44.773
Operating Margin
0.435
Profit Margin
0.1773
Return On Assets
0.0197
Given that Realty Income's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Realty Income is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Realty Income to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Realty Income is said to be less leveraged. If creditors hold a majority of Realty Income's assets, the Company is said to be highly leveraged.
At this time, Realty Income's Liabilities And Stockholders Equity is very stable compared to the past year. As of the 20th of June 2024, Non Current Liabilities Total is likely to grow to about 23.9 B, though Change To Liabilities is likely to grow to (4.5 M).
  
Check out the analysis of Realty Income Fundamentals Over Time.

Realty Income Bond Ratings

Realty Income Corp financial ratings play a critical role in determining how much Realty Income have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Realty Income's borrowing costs.
Piotroski F Score
6
HealthyView
Beneish M Score
(2.48)
Unlikely ManipulatorView

Realty Income Corp Debt to Cash Allocation

As Realty Income Corp follows its natural business cycle, the capital allocation decisions will not magically go away. Realty Income's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors.
Realty Income Corp has accumulated 21.99 B in total debt with debt to equity ratio (D/E) of 0.63, which looks OK as compared to the sector. Realty Income Corp has a current ratio of 1.43, which is considered satisfactory as compared to similar companies. Note however, debt could still be an excellent tool for Realty to invest in growth at high rates of return.

Realty Income Total Assets Over Time

Realty Income Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Realty Income uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.

Realty Income Debt Ratio

    
  31.0   
It appears that about 69% of Realty Income's assets are financed through equity. Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the Realty Income's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Realty Income, which in turn will lower the firm's financial flexibility.

Realty Income Corporate Bonds Issued

Realty Income issues bonds to finance its operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world's largest securities market. Realty Income Corp uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt.

Realty Short Long Term Debt Total

Short Long Term Debt Total

23.09 Billion

At this time, Realty Income's Short and Long Term Debt Total is very stable compared to the past year.

Understaning Realty Income Use of Financial Leverage

Realty Income financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Realty Income's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Realty Income assets, the company is considered highly leveraged. Understanding the composition and structure of overall Realty Income debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it. Financial leverage can amplify the potential profits to Realty Income's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Realty Income's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
Last ReportedProjected for Next Year
Short and Long Term Debt Total22 B23.1 B
Net Debt21.8 B22.8 B
Long Term Debt20.8 B21.8 B
Short Term Debt764.4 M896.3 M
Long Term Debt Total17.7 B18.6 B
Short and Long Term Debt764.4 M726.2 M
Net Debt To EBITDA 5.90  3.50 
Debt To Equity 0.67  0.58 
Interest Debt Per Share 32.89  34.53 
Debt To Assets 0.38  0.31 
Long Term Debt To Capitalization 0.39  0.30 
Total Debt To Capitalization 0.40  0.31 
Debt Equity Ratio 0.67  0.58 
Debt Ratio 0.38  0.31 
Cash Flow To Debt Ratio 0.13  0.13 
Please read more on our technical analysis page.

Building efficient market-beating portfolios requires time, education, and a lot of computing power!

The Portfolio Architect is an AI-driven system that provides multiple benefits to our users by leveraging cutting-edge machine learning algorithms, statistical analysis, and predictive modeling to automate the process of asset selection and portfolio construction, saving time and reducing human error for individual and institutional investors.

Try AI Portfolio Architect

Additional Information and Resources on Investing in Realty Stock

When determining whether Realty Income Corp offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Realty Income's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Realty Income Corp Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Realty Income Corp Stock:
Check out the analysis of Realty Income Fundamentals Over Time.
You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Is Retail REITs space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Realty Income. If investors know Realty will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Realty Income listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
(0.54)
Dividend Share
3.071
Earnings Share
1.08
Revenue Per Share
5.973
Quarterly Revenue Growth
0.333
The market value of Realty Income Corp is measured differently than its book value, which is the value of Realty that is recorded on the company's balance sheet. Investors also form their own opinion of Realty Income's value that differs from its market value or its book value, called intrinsic value, which is Realty Income's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Realty Income's market value can be influenced by many factors that don't directly affect Realty Income's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Realty Income's value and its price as these two are different measures arrived at by different means. Investors typically determine if Realty Income is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Realty Income's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

What is Financial Leverage?

Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.

Leverage and Capital Costs

The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.

Benefits of Financial Leverage

Leverage provides the following benefits for companies:
  • Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
  • It provides a variety of financing sources by which the firm can achieve its target earnings.
  • Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.