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New Post has been published on http://www.stockmarketsdaily.com/value-investors-digital-realty-trust-inc-nysedlr/10841/
Overpriced Upgrade: Digital Realty Trust (NYSE:DLR)
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Digital Realty Trust Inc. (NYSE:DLR) was upgraded yesterday by analysts at Stifel from a hold to a buy, and they have also set their 12 month price target on the stock at $73. We see how this compares to the overall market consensus on DLR, which appears to show the stock as being overpriced based on the analysis below. [Trend Analysis]
Digital Realty Trust Inc. (NYSE:DLR) last traded at $66.94 after moving up 0.84% for the trading day.
DLR is trading with a trailing 12 month P/E multiple of 67.62 and an estimated forward P/E multiple of 49.08. The stock has an estimated 5 year annual growth of 5.15% and a PEG multiple of 13.13.
From a value investor perspective, as mentioned Digital Realty Trust Inc. trades on an estimated forward P/E multiple of 49.08. The current estimated forward P/E ratio for the market as a whole is approximately 19.00. Therefore, for value investors DLR appears to be overpriced.
For growth investors, who are more interested in growth into the longer term for the stock, we look at the PEG multiple (P/E to growth) of Digital Realty Trust Inc. (NYSE:DLR). This PEG multiple takes into account the expected long term growth in earnings of Digital Realty Trust Inc. rather than merely the growth for one full earnings period ahead.
As a rule of thumb, growth investors often believe a stock with a PEG of between 0 and 1 is considered to be underpriced, between 1 and 2 to be at fair value and over 2 to be overpriced. Based on the PEG ratio of DLR being 13.13, we consider Digital Realty Trust Inc. to likely be overpriced.
The mean analyst 12 month target price for Digital Realty Trust Inc. (NYSE:DLR) is currently $70.25 or 4.94% above the current price.
Additionally, the stock has been as high as $75.39 and as low as $48.85 in the last 52 weeks. Analysts are estimating that DLR will report earnings per share of $1.24 next quarter.
