QS Research · Michael Burry's Scion Capital analyst template · 2006
DIGITAL REALTY TRUST, INC. (DLR)
As of 2026-11-09 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -20% · upside +8%
The market is not missing DLR's growth: Q3 2026 revenue rose 20.6%, record backlog is $2.5B ($1.8B at share), and guidance was raised, yet the stock trades at 29.8x EV/EBITDA, above EQIX's 27.2x. The offset is leverage at 5.2x, ATM dilution and a 74.4x P/E that rests on net income to common ($885.8M) far above EBIT ($197.1M). Base arithmetic: 29.8x x $2.24B EBITDA = $66.75B EV; less $0.84B net debt = $65.91B / 378.33M = ~$174.2, flat. I only re-rate the upside to 32.0x (~$187.3, +7.5%) on the dated 2026-10-29 guidance raise and 2026-10-31 backlog, with downside 24.0x (~$139.9, -19.7%) on the dated leverage/ATM balance-sheet events; that is not enough for a long or a short, so watch.
Key numbers
- Share price: $174.20
- Market cap: $65.90B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $7.10B
- EV / EBITDA (TTM): 29.8x
- P/E (TTM): 74.4x
- Price / book: 2.41x
The 15 boxes
- ✓ 1. Long-form business notes
DLR is a REIT that owns and operates data centers and sells contracted capacity plus interconnection services; at Dec 31 2025 it had 310 data centers, ~57.6M rentable sq ft, ~84.7% leased, and 769 MW under construction with 64% pre-leased. Between FY2020 and FY2025, revenue rose from $3.90B to $6.11B, operating cash flow from $1.71B to $2.41B, and operating income from $557.5M to $658.5M. The footprint shifted from 291 data centers in 49 metros/24 countries at Dec 31 2020 to 310 data centers, 55+ metros and 30+ countries at Dec 31 2025, with more unconsolidated holdings and more Europe, Latin America and Africa exposure. FY2025 net income to common of $1.27B is far above operating income of $658.5M, so the source does not present net income as a clean operating-profit measure.
- ✓ 2. Competitive advantage
DLR claims durable advantages in global scale, interconnection density, modular design and access to capital; the supplied record shows revenue scale rising to $6.11B in FY2025 and operating cash flow of $2.41B, but operating income has not grown in line with revenue and net income to common is not a clean operating measure. Competition is broad and named: Equinix, NTT, Global Switch and many private/regional operators. The computed risk-factor diff adds power-cost competitive disadvantage. My read: some scale/network/capital advantages, but no clean margin proof of durable pricing power in these sources.
- ✓ 3. 10-Q takeaways
Q3 2026 revenue grew 20.6% to $1.902B, with stabilized rental revenue up 8.8% and non-stabilized up 59.9%, while total operating expenses rose 11.8%. Q3 net income was $193.6M, Adjusted EBITDA $977.7M, and Core FFO excluding net promote $2.10 per diluted share/unit; the nine-month period includes $201M of promote income. Cash was $802.9M, the ATM raised $2.9B net in nine months, and the 10-Q gives only qualitative renewal-rate outlook, with no numeric guidance in the provided release excerpt.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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