I Built A List Of Growing Companies And Realty Income (NYSE:O) Made The Cut

NYSE:O). Now, I’m not saying that the stock is necessarily undervalued today; but I can’t shake an appreciation for the profitability of the business itself. In comparison, loss making companies act like a sponge for capital – but unlike such a sponge they do not always produce something when squeezed.” data-reactid=”29″>So if you’re like me, you might be more interested in profitable, growing companies, like Realty Income (NYSE:O). Now, I’m not saying that the stock is necessarily undervalued today; but I can’t shake an appreciation for the profitability of the business itself. In comparison, loss making companies act like a sponge for capital – but unlike such a sponge they do not always produce something when squeezed.

See our latest analysis for Realty Income ” data-reactid=”30″>See our latest analysis for Realty Income

Realty Income’s Earnings Per Share Are Growing.

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. That makes EPS growth an attractive quality for any company. Realty Income managed to grow EPS by 7.6% per year, over three years. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

One way to double-check a company’s growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Realty Income maintained stable EBIT margins over the last year, all while growing revenue 14% to US$1.6b. That’s progress.

In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.

report showing analyst forecasts for Realty Income’s future profits.” data-reactid=”51″>You don’t drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Realty Income’s future profits.

Are Realty Income Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$21b company like Realty Income. But we are reassured by the fact they have invested in the company. To be specific, they have US$35m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 0.2% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

It means a lot to see insiders invested in the business, but I find myself wondering if remuneration policies are shareholder friendly. Well, based on the CEO pay, I’d say they are indeed. For companies with market capitalizations over US$8.0b, like Realty Income, the median CEO pay is around US$11m.

Realty Income offered total compensation worth US$7.5m to its CEO in the year to . That seems pretty reasonable, especially given its below the median for similar sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. I’d also argue reasonable pay levels attest to good decision making more generally.

Should You Add Realty Income To Your Watchlist?

2 warning signs for Realty Income (1 shouldn’t be ignored!) that you need to be mindful of.” data-reactid=”57″>One positive for Realty Income is that it is growing EPS. That’s nice to see. The fact that EPS is growing is a genuine positive for Realty Income, but the pretty picture gets better than that. Boasting both modest CEO pay and considerable insider ownership, I’d argue this one is worthy of the watchlist, at least. We don’t want to rain on the parade too much, but we did also find 2 warning signs for Realty Income (1 shouldn’t be ignored!) that you need to be mindful of.