As of June 3, 2025, Digital Realty Trust Inc's estimated intrinsic value ranges from $0.06 to $155.50 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $155.50 | -10.0% |
| Discounted Cash Flow (5Y) | $84.25 | -51.2% |
| Dividend Discount Model (Multi-Stage) | $133.73 | -22.6% |
| Dividend Discount Model (Stable) | $95.62 | -44.6% |
| Earnings Power Value | $0.06 | -100.0% |
Is Digital Realty Trust Inc (DLR) undervalued or overvalued?
With the current market price at $172.72, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Digital Realty Trust Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.36 | 0.5 |
| Cost of equity | 5.5% | 7.7% |
| Cost of debt | 4.0% | 7.0% |
| Tax rate | 7.5% | 8.0% |
| Debt/Equity ratio | 0.29 | 0.29 |
| After-tax WACC | 5.1% | 7.4% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $84 | $43,066M | 90.3% |
| 10-Year Growth | $156 | $67,060M | 84.0% |
| 5-Year EBITDA | $201 | $82,412M | 94.9% |
| 10-Year EBITDA | $254 | $100,126M | 89.3% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $890M |
| Discount Rate (WACC) | 7.4% - 5.1% |
| Enterprise Value | $12,045M - $17,388M |
| Net Debt | $14,694M |
| Equity Value | $(2,650)M - $2,693M |
| Outstanding Shares | 337M |
| Fair Value | $(8) - $8 |
| Selected Fair Value | $0.06 |
| Metric | Value |
|---|---|
| Market Capitalization | $58163M |
| Enterprise Value | $72858M |
| Trailing P/E | 134.96 |
| Forward P/E | 78.23 |
| Trailing EV/EBITDA | 17.15 |
| Current Dividend Yield | 293.17% |
| Dividend Growth Rate (5Y) | 7.14% |
| Debt-to-Equity Ratio | 0.29 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $46.65 |
| Discounted Cash Flow (5Y) | 25% | $21.06 |
| Dividend Discount Model (Multi-Stage) | 20% | $26.75 |
| Dividend Discount Model (Stable) | 15% | $14.34 |
| Earnings Power Value | 10% | $0.01 |
| Weighted Average | 100% | $108.81 |
Based on our comprehensive valuation analysis, Digital Realty Trust Inc's weighted average intrinsic value is $108.81, which is approximately 37.0% below the current market price of $172.72.
Key investment considerations:
Given these factors, we believe Digital Realty Trust Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.