Is Digital Realty Trust, Inc. overvalued or undervalued?

As of 24 October 2024, the valuation grade for Digital Realty Trust, Inc. has moved from expensive to very expensive, indicating a significant shift in its perceived value. The company is currently deemed overvalued, with a P/E ratio of 87, an EV to EBITDA of 22.06, and a Price to Book Value of 2.80. These metrics suggest that the stock is trading at a premium compared to its earnings and book value.
In comparison to its peers, Digital Realty's P/E ratio is notably higher than that of Prologis, Inc., which has a P/E of 26.72, and Realty Income Corp., which is valued at 37.02. Additionally, the company's return on equity (ROE) stands at a low 3.21%, further highlighting its overvaluation relative to peers. Despite a recent 1-year stock return of 19.54%, which outperformed the S&P 500's 10.26%, the elevated valuation ratios indicate that Digital Realty Trust, Inc. may not sustain its current price levels in the long term.