Does Recent Debt Refinancing Impact Realty Income’s True Worth in 2025?

Thinking about what to do with Realty Income stock right now? You are not alone. Whether you already own shares, are considering a buy or simply watching from the sidelines, Realty Income has captured the attention of investors again as its price moves have sent mixed signals. The stock is up a solid 10.8% so far this year, yet it has stepped back with a 3.5% loss over the past week and is just about flat over the last year. So what should you make of this back-and-forth movement?

Some of the recent shifts reflect changes in sentiment in the broader real estate market and evolving expectations around interest rates. Over the longer term, the stock has rewarded patient shareholders with a 27.5% return over five years, signaling resilience even through industry ups and downs.

But let’s get to the question most investors care about: is Realty Income undervalued, overvalued, or fairly priced right now? According to the latest valuation scorecard, Realty Income passes 2 out of 6 undervaluation checks, giving it a score of 2. While there are some signs this stock could be a lagging value play, it is not showing a deep bargain based on these metrics.

We will break down how analysts determine valuation, what those six checks actually mean, and where Realty Income stands on each. There is also a fresh perspective on evaluating Realty Income's real worth coming up as we wrap up.

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 estimates what Realty Income is worth today by projecting its future adjusted funds from operations and discounting those future amounts back to present value. Essentially, this approach helps investors understand what they would pay for the company's expected cash over time in today’s dollars.

Based on the most recent financials, Realty Income generated $3.62 billion in Free Cash Flow (FCF) over the last twelve months. Analysts project FCF to steadily increase, reaching approximately $4.7 billion by 2029. Estimates for years beyond 2029 are extrapolated from the last available analyst forecasts. These projections provide a data-driven forecast, making them useful for judging long-term value.

According to this DCF analysis, Realty Income’s estimated fair value is $93.83 per share. With the current market price reflecting a 37.9% discount from this intrinsic value, the model suggests the stock is trading at a compelling level of undervaluation compared to its underlying cash generation potential.

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 37.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Realty Income Price vs Earnings (PE Ratio)

The Price-to-Earnings (PE) ratio is a widely used valuation metric for profitable companies like Realty Income because it tells investors how much they are paying for each dollar of earnings. A high PE can signal high growth expectations or lower perceived risk, while a lower PE often suggests the opposite. What counts as a “normal” or “fair” PE ratio generally depends on factors like a company’s expected earnings growth, industry stability, and overall risk profile.

Right now, Realty Income is trading at a PE ratio of 58.66x, which is well above the Retail REITs industry average of 25.17x and its peer group’s average of 32.43x. This means investors are paying a significant premium relative to both industry and peer benchmarks for each dollar of Realty Income’s earnings.

However, rather than rely solely on these general benchmarks, Simply Wall St also calculates a “Fair Ratio” for each company. This Fair Ratio takes into account not just industry and peer comparisons, but also specific factors unique to Realty Income, such as its earnings growth, profit margins, relative risk, and size. For Realty Income, the Fair PE Ratio is 38.50x. Since its current PE ratio of 58.66x is much higher than this proprietary fair valuation, the analysis suggests that the stock is trading above what would be justified by its underlying fundamentals and outlook.

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 us introduce you to Narratives. A Narrative is your own story or perspective about a company, combining your key assumptions about future growth, margins, and risk to produce a fair value that reflects how you see the company’s future unfolding.

Instead of relying on static metrics, Narratives link Realty Income’s business story with actual financial forecasts and automatically calculate a fresh fair value for you. On Simply Wall St’s Community page, millions of investors can easily create, view, or tweak Narratives for any stock, making confident buy, hold, or sell decisions by comparing your current fair value with the latest share price.

What makes Narratives so powerful is that they update automatically when important news or earnings drop, so your view always stays relevant. For example, some investors might see Realty Income as a stable dividend grower, valuing it around $61.26 based on cautious assumptions about slowing dividend growth, while others believe international diversification and necessity-based assets will drive higher revenue growth, supporting a fair value closer to $62.79.

By leveraging Narratives, you can focus on what really matters, your personal view of Realty Income’s future, with dynamic tools to sense-check your thinking against both real numbers and other investors’ perspectives.

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.

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