Last update on 2024-06-06

Digital Realty Trust (DLR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Digital Realty Trust (DLR) achieves a Piotroski F-Score of 6/9 for 2023, showcasing financial strengths in profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 6

We're running Digital Realty Trust (DLR) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is used to gauge the strength of a company's financial position on a scale of 0 to 9. Digital Realty Trust (DLR) has achieved a Piotroski Score of 6. Key analyses of DLR's profitability, liquidity, and operating efficiency include: 1. Positive Net Income: $948,838,000 in 2023 - 1 point. 2. Positive Cash Flow from Operations: $1,634,780,000 in 2023 - 1 point. 3. Growing Return on Assets (ROA): Increased from 0.0097 to 0.0222 - 1 point. 4. Operating Cash Flow higher than Net Income: $1,634,780,000 vs $948,838,000 - 1 point. 5. Leverage has increased: From 0.3837 to 0.3889 - 0 points. 6. Current Ratio improvement: From 0.2535 to 0.7672 - 1 point. 7. Increase in Outstanding Shares: From 286,334,000 to 298,603,000 - 0 points. 8. Gross Margin has decreased: From 0.57 to 0.5256 - 0 points. 9. Asset Turnover has improved: From 0.1205 to 0.128 - 1 point.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski Score of 6, Digital Realty Trust (DLR) is in fairly good financial health with strengths in profitability, cash flow, and asset utilization. However, some areas like leverage and share dilution could be concerning. Given the positive trends in key areas, the stock might be worth considering for further investigation and as a potential investment. More in-depth analysis and comparison with industry benchmarks are recommended before making any commitment.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Digital Realty Trust (DLR)

Company has a positive net income?

Check if Netincome of 948838000 in 2023 is postive or negativ. If the Netincome is postive add 1 point if not set it to 0.

The Netincome for Digital Realty Trust (DLR) in 2023 is $948,838,000, which is positive. Therefore, we add 1 point as per the criterion. Looking at the historical net income data over the past 20 years, we can observe a trend of overall growth. Notably, there are spikes in certain years such as 2021 with $1.7 billion, and dips in other years like 2018 with $331 million. However, the positive net income in 2023 indicates continued profitability and is a positive indicator for the company.

Company has a positive cash flow?

Cash Flow from Operations (CFO) examines the cash a company generates from its primary business activities and is vital for understanding its operational efficiency.

Digital Realty Trust (DLR) has reported a positive CFO of $1,634,780,000 for 2023. This trend signifies a continued robust performance in its operational efficiency, considering the broader context of a consistently positive CFO over the last 20 years. Digital Realty's CFO has shown an impressive upward trajectory from $28,986,000 in 2003, reflecting substantial growth. This consistent performance earns a full point under the Piotroski F-Score framework, underscoring operational strengths.

Return on Assets (ROA) are growing?

The change in Return on Assets (ROA) analyzes the company's effectiveness in generating profit from its assets over time.

In 2022, Digital Realty Trust (DLR) demonstrated an ROA of 0.0097, which has seen a notable increase to 0.0222 in 2023. This rise indicates a positive trend, reflecting an improved efficiency in asset utilization to generate profits. When we analyze historical data, Digital Realty Trust's ROA has fluctuated yet shown a consistent increment, especially from its 2003 figure. Despite these improvements, it remains significantly below the 2023 industry median ROA of 0.6434. Therefore, while DLR is improving, it still trails industry benchmarks. Given the increase from 2022, 1 point is added in the Piotroski score for this criterion.

Operating Cashflow are higher than Netincome?

This criterion compares a company's operating cash flow with its net income, signaling potential earnings quality.

For Digital Realty Trust (DLR), the operating cash flow for 2023 is $1,634,780,000 while the net income stands at $948,838,000. Since the operating cash flow is significantly higher than the net income, this is an indication of strong earnings quality, earning a score of 1 on this criterion. Historically, DLR has shown a consistent trend of higher operating cash flows compared to net income, reinforcing the company's cash-generating ability and operational health. This metric is crucial as it suggests that DLR is generating enough cash from its core business operations to exceed its net earnings, implying less reliance on accounting adjustments or non-operational gains.

Liquidity of Digital Realty Trust (DLR)

Leverage is declining?

Change in Leverage, often referred to as the shift in debt-to-equity ratio, gauges a company's ability to meet its financial liabilities. A lower leverage ratio is typically favored since it indicates less debt and potentially safer investment grounds.

Comparing the leverage of 0.3837 in 2022 with 0.3889 in 2023, it is evident that leverage has increased slightly by 0.0052. This uptick indicates that Digital Realty Trust has taken on slightly more debt relative to its equity. Some amount of borrowing can potentially foster growth through investments or acquisitions. However, the increase in leverage assigns a point of 0 for this criterion, indicating a negative aspect when strictly adhering to the Piotroski scoring method. Historical data over the last 20 years reveal fluctuations in leverage, for instance, a peak leverage of 0.6173 in 2003 declining to 0.2869 in 2012. While some variations are expected, maintaining a lower leverage often accentuates financial stability.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets. A higher current ratio indicates better liquidity and financial health.

The Current Ratio for Digital Realty Trust (DLR) increased from 0.2535 in 2022 to 0.7672 in 2023, marking a significant improvement. This increase in the Current Ratio is a positive trend, suggesting that the company has improved its ability to cover short-term liabilities with its short-term assets. Historically, DLR has had fluctuating Current Ratios. For example, in 2009, the ratio was 1.4023, comparable to the industry median of 1.4023, while it dropped to 0.2535 in 2022. The industry median current ratio in the recent years shows a more stable trend, but DLR's ratio in 2023 meeting the industry median signifies a favorable trend. This criterion would be awarded 1 point for the increase in 2023.

Number of shares not diluted?

The change in shares outstanding reflects a company's activities such as stock issuance or buyback. A decrease suggests the company is buying back its stock, whereas an increase indicates issuance.

In 2022, Digital Realty Trust (DLR) had 286,334,000 outstanding shares, which increased to 298,603,000 in 2023, reflecting a growth in outstanding shares. Over the past 20 years, there has been a notable upward trend in the number of shares, depicting a pattern of consistent share issuance. This trend suggests the company has been raising capital likely for expansion or other financial strategies. Therefore, for this criterion, Digital Realty Trust scores 0 points as the outstanding shares increased.

Operating of Digital Realty Trust (DLR)

Cross Margin is growing?

One criterion of the Piotroski Score is the change in Gross Margin. A company's Gross Margin reflects its core profitability. A higher Gross Margin typically signifies better control over costs and improved profitability.

In 2023, the Gross Margin for Digital Realty Trust (DLR) is 0.5256, down from 0.57 in 2022. This decline suggests a reduction in profitability and cost efficiency, thus earning a score of 0 for this criterion. Over the past 20 years, DLR has seen higher Gross Margins compared to the industry median, but the recent decrease is a concerning trend.

Asset Turnover Ratio is growing?

The Change in Asset Turnover criteria examines the efficiency of a company's use of its assets to generate revenue. An increasing Asset Turnover ratio implies better asset utilization.

When comparing the Asset Turnover ratio for Digital Realty Trust (NYSE: DLR) from 2022 (0.1205) to 2023 (0.128), we observe an increase. This positive trend earns the company a point for this criterion, indicating improved efficiency in the utilization of its assets to generate revenue. The historical data shows that this ratio peaked at 0.1907 in 2010 and has generally declined since, making the recent uptick in 2023 noteworthy. This upward move, although modest, suggests potential improvement or positive shifts in the company's operational efficiency.