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Digital Realty Trust, Inc. (DLR) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Digital Realty Trust, Inc. (DLR)

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Intrinsic Value (DCF)

Current$160.57
→
Intrinsic$184.25
+15%
$109.22$184.25$333.41
Market implies 17% growth for 5 years
DLR appears fairly valued — current price aligns with our DCF estimate.
At $161, the market prices in continued high-teens cash flow growth (17%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $109 → Bull $333. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →16%18%20%22%
8%$242$266$292$319
10%$151$167$184$202
12%$104$115$128$141
14%$74$83$93$103

Bull Case

  • Bull case ($333) offers 108% upside at 24% growth, 8% discount
  • 13% margin of safety vs. base case estimate
  • Market-implied growth (17%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($109) implies 32% downside at 16% growth, 12% discount
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5-Year FFO Projection

Year 1$2.85B
Year 2$3.42B
Year 3$4.10B
Year 4$4.92B
Year 5$5.91B
Terminal$93.62B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base FFO$2.37BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses FFO per NAREIT standards. See FAQ below for full methodology.

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Frequently Asked Questions

Is DLR stock undervalued or overvalued?
🟢 UNDERVALUED

DLR trades at $160.57 vs. our DCF-derived intrinsic value of $184.25, implying +18% upside. At a 9.5% WACC and 20.0% projected FCF growth, the market appears to be underpricing the present value of DLR's future cash flows. The bear case ($103.50) still suggests upside, providing margin of safety.

What is DLR's intrinsic value?

Using a 5-year DCF model: Base FCF of $2.37B, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $14.14B net debt and dividing by 0.33B shares: Bear $103.50 | Base $184.25 | Bull $306.93. Current price $160.57 implies +18% to base case.

How is DLR's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($75.23B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 31.7x.