Assessing O Shares After Blackstone Deal and Recent Price Climb in 2025

If you are trying to decide what to do with your shares of Realty Income, or thinking about starting a new position, you are not alone. The stock has seen its fair share of ups and downs lately, and investors are buzzing about where it could go next. Over the past week, Realty Income’s share price climbed 2.9%, and it has returned a solid 14.0% so far this year. Of course, zooming out reveals a slightly different picture, with a 2.0% dip over the last year, but a sturdy 30.7% return over the past five years. These swings reflect changing attitudes about growth potential and risk in the real estate sector, shaped partly by interest rate moves and evolving demand for income-producing properties.

With a value score of just 2 out of 6, Realty Income is currently undervalued by a couple of measures but not enough to signal a clear bargain. That doesn’t mean there is no opportunity; it just means we need to dig a little deeper to understand what those numbers are really saying. In the next section, we will walk through the most widely used valuation methods, looking at how Realty Income stacks up on each, and hint at a surprisingly insightful perspective that goes beyond conventional metrics.

Realty Income scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Realty Income Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a widely used method to estimate a company's intrinsic value by projecting its future cash flows, in this case, the adjusted funds from operations, and discounting them back to their present value. For Realty Income, analysts and forecasts have been used to project the company’s Free Cash Flow (FCF) in $ Billions over the next decade.

Currently, Realty Income generates $3.62 Billion in Free Cash Flow. Analyst estimates extend to 2029, with the company’s FCF expected to grow steadily, reaching approximately $4.70 Billion by the end of that period. Beyond five years, further projections are extrapolated to account for ongoing growth trends.

After discounting these anticipated cash flows back to today’s value, the DCF model calculates an intrinsic share value of $93.83. This indicates the stock is trading at a 36.1% discount to its estimated fair value, a significant margin for investors seeking undervalued real estate opportunities.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Realty Income.

Our Discounted Cash Flow (DCF) analysis suggests Realty Income is undervalued by 36.1%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Realty Income Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely recognized method for valuing profitable companies, as it relates the company's market price to its underlying earnings. PE is especially helpful for investors because it reflects not only current profitability, but also incorporates expectations about future growth and the risk investors are willing to take. A higher PE can signal optimism about growth potential, while a lower PE may point to concerns about stability or future returns.

Currently, Realty Income trades at a PE ratio of 60.35x. When placed side by side with the Retail REITs industry average of 26.45x and the peer average of 33.53x, it becomes clear that the stock commands a significant premium to both benchmarks. This elevated ratio could suggest that investors expect superior growth or resilience compared to its peers, or it might reflect greater perceived stability in Realty Income’s business model.

Simply Wall St’s proprietary “Fair Ratio” seeks to address the limitations of basic benchmark comparisons by taking into account the company’s unique growth prospects, profit margins, industry specifics, market cap, and risks. For Realty Income, this Fair Ratio has been calculated at 38.37x, which is substantially lower than its current PE. This makes the Fair Ratio a more comprehensive yardstick than industry or peer averages alone, providing investors with a better sense of the stock's value based on factors relevant to its future prospects and operational realities.

Stacked up against its Fair Ratio, Realty Income’s current PE looks stretched. With its actual PE about 22x higher than the Fair Ratio, this suggests the stock is overvalued by this measure.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Realty Income Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. In simple terms, a Narrative is your story and perspective about a company, linking your assumptions for future revenue, earnings, and margins with a fair value you believe in, providing context behind the numbers.

Narratives empower you to go beyond standard ratios by connecting a company’s story and your reasoning for why you think it will perform a certain way to a financial forecast and eventually to a personal fair value estimate. On Simply Wall St’s Community page, used by millions of investors, Narratives make it easy to create, share, and compare investment stories for any company, including Realty Income.

When you set your Narrative, you can compare your fair value to the current market price, helping you decide whether to buy, hold, or sell based on your convictions. What’s more, Narratives update dynamically whenever new facts, like earnings or news, arrive, ensuring your investment thesis always reflects the latest information.

For Realty Income, some investors may set a cautious Narrative, forecasting moderate dividend growth and a fair value around $61 per share, while others highlight resilient growth from European expansion and necessity-based assets, supporting a fair value near $75. Narratives let you see not only how others interpret the story but also help you stick to, and clearly communicate, yours.

Do you think there's more to the story for Realty Income? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com