Realty Income Debt
| O Stock | USD 58.32 0.57 0.99% |
Realty Income 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 28th of November 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 |
|
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, 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 1.3143 | Book Value 43.942 | Operating Margin 0.4488 | Profit Margin 0.1754 | Return On Assets 0.0224 |
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 28th of November 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). Realty |
Realty Income Bond Ratings
Realty Income 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 | Healthy | View |
| Beneish M Score | (2.33) | Unlikely Manipulator | View |
Realty Income Debt to Cash Allocation
As Realty Income 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 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 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 | 29.0 |
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 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 |
|
Understaning Realty Income Use of Financial Leverage
Leverage ratios show Realty Income's total debt position, including all outstanding obligations. In simple terms, high financial leverage means that the cost of production, along with the day-to-day running of the business, is high. Conversely, lower financial leverage implies lower fixed cost investment in the business, which is generally considered a good sign by investors. The degree of Realty Income's financial leverage can be measured in several ways, including ratios such as the debt-to-equity ratio (total debt / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 22 B | 23.1 B | |
| Net Debt | 21.8 B | 22.8 B | |
| Long Term Debt | 20.8 B | 21.8 B | |
| Short Term Debt | 764.4 M | 1.3 B | |
| Long Term Debt Total | 17.7 B | 18.6 B | |
| Short and Long Term Debt | 764.4 M | 726.2 M | |
| Net Debt To EBITDA | 6.07 | 3.71 | |
| Debt To Equity | 0.65 | 0.53 | |
| Interest Debt Per Share | 32.21 | 33.82 | |
| Debt To Assets | 0.37 | 0.29 | |
| Long Term Debt To Capitalization | 0.39 | 0.30 | |
| Total Debt To Capitalization | 0.40 | 0.30 | |
| Debt Equity Ratio | 0.65 | 0.53 | |
| Debt Ratio | 0.37 | 0.29 | |
| Cash Flow To Debt Ratio | 0.14 | 0.13 |
Pair Trading with Realty Income
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Realty Income position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Realty Income will appreciate offsetting losses from the drop in the long position's value.Moving together with Realty Stock
Moving against Realty Stock
| 0.75 | UE | Urban Edge Properties | PairCorr |
| 0.67 | WELL | Welltower | PairCorr |
| 0.6 | AKR | Acadia Realty Trust | PairCorr |
| 0.56 | EQIX | Equinix | PairCorr |
| 0.52 | PK | Park Hotels Resorts | PairCorr |
The ability to find closely correlated positions to Realty Income could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Realty Income when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Realty Income - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Realty Income to buy it.
The correlation of Realty Income is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Realty Income moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Realty Income moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Realty Income can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Check out the analysis of Realty Income Fundamentals Over Time. To learn how to invest in Realty Stock, please use our How to Invest in Realty Income guide.You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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 (0.09) | Dividend Share 3.111 | Earnings Share 1.05 | Revenue Per Share 6.077 | Quarterly Revenue Growth 0.286 |
The market value of Realty Income 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.