Shares of Realty Income (O) are down in after-hours trading after the real estate investment trust (REIT) reported earnings for its fourth quarter of Fiscal Year 2024. Earnings per share came in at $0.23, which missed analysts’ consensus estimate of $0.37 per share. In addition, Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO), which are the more widely used metrics for REITs, both came in at $1.05 per share, which also missed estimates of $1.07.
FFO is measured by adding back depreciation and amortization, along with losses incurred on asset sales, to earnings. After that, any gains on asset sales and interest income are subtracted from earnings. AFFO is measured by adjusting for even more non-cash expenses.
However, sales increased by 24.1% year-over-year, with revenue hitting $1.34 billion. This beat analysts’ expectations of $1.28 billion. These results were driven by a strong occupancy rate of 98.7% and same-store rent growth of 0.8% year-over-year.
Realty Income’s 2025 Outlook
Looking forward, management now expects the following for FY 2025:
- Normalized AFFO per share between $4.22 and $4.28 versus analysts’ estimates of $4.30 per share
- Same-store rent growth of approximately 1%
- Occupancy rate of over 98%
As you can see, guidance for FFO per share was worse than expected, which, along with its earnings results, is what likely led to the stock’s dip in after-hours trading.
Is O Stock a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on O stock based on three Buys, seven Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 15% increase in its share price over the past year, the average Realty Income price target of $61.25 per share implies 7% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
