Digital Realty Stock Rallies 15.4% in 3 Months: Will This Trend Last?

Digital Realty's stock has risen 15.4% in 3 months, driven by robust demand for data centers and the company's diverse tenant roster, accretive buyouts, development efforts, and solid balance sheet strength. Analysts are positive, with a Zacks Rank #2 (Buy) and a revised 2025 FFO per share estimate of $7.04. The company's backlog of signed but not commenced leases reached a record high of $1.3 billion, and it has a high-quality, diversified customer base across 308 data centers in more than 50 metros.

Digital Realty Trust (DLR) has seen its stock rise by 15.4% over the past three months, driven by robust demand for data centers, a diverse tenant roster, accretive buyouts, development efforts, and a solid balance sheet. The company's backlog of signed but not commenced leases reached a record high of $1.3 billion, and it has a high-quality, diversified customer base across 308 data centers in more than 50 metros [1].

Analysts remain positive about DLR, with a Zacks Rank of #2 (Buy) and a revised 2025 FFO per share estimate of $7.04. Several institutional investors have increased their stakes in DLR, including BluePointe Capital Management LLC, which grew its position by 49.7% in the first quarter of 2025 [2]. This positive sentiment is reflected in the company's financial performance, which has seen revenue growth of 11.67% year-over-year and an operating margin of 12.17% [1].

DLR's stock price has been supported by its strong financial metrics and strategic initiatives. The company's debt-to-equity ratio of 0.81 and current ratio of 1.92 indicate a healthy balance sheet, while its return on equity of 5.85% demonstrates efficient capital allocation [1]. Additionally, the company's recent earnings report showed a 7.65% net margin and a return on equity of 2.07% [1].

Despite the positive outlook, investors should remain vigilant. The company's high payout ratio of 456.07% indicates that a significant portion of its earnings are being distributed as dividends, which could impact future growth if earnings do not keep pace with dividend payments. Furthermore, the company's forward P/E ratio of 117.41 suggests that the stock may be more expensive than its peers, which could pose a risk if earnings do not meet expectations [1].

In conclusion, Digital Realty Trust's strong performance and positive analyst sentiment make it an attractive investment for those seeking exposure to the data center sector. However, investors should carefully consider the company's valuation and payout ratio before making a decision.

References:
[1] https://www.forbes.com/companies/digital-realty-trust/
[2] https://www.marketbeat.com/instant-alerts/filing-bluepointe-capital-management-llc-purchases-1626-shares-of-digital-realty-trust-inc-nysedlr-2025-07-15/