Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Realty Income Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -0.4% to -12.0% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 166, DPO 30, DIO 42). At a 7.8% WACC with mid-year discounting, the terminal value (74% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 14.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $48.69 per share, suggesting O is overvalued by 19.5% at the current price of $60.49.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 4,942 | 5,221 | 5,781 | 6,039 | 5,314 | 5,447 |
| (−) Net Interest | 115 | 121 | 134 | 140 | 123 | 126 |
| (+) D&A | 87 | 107 | 112 | 125 | 129 | 132 |
| EBITDA | 5,144 | 5,449 | 6,026 | 6,304 | 5,566 | 5,705 |
| (−) Tax | 273 | 288 | 319 | 333 | 293 | — |
| (−) CapEx | 115 | 122 | 135 | 141 | 124 | — |
| (−) ΔWC | 1,565 | 148 | 296 | 137 | -384 | — |
| Free Cash Flow (FCF) | 3,191 | 4,891 | 5,277 | 5,693 | 5,533 | — |
| Peers' EBITDA Multiple | 14.4x | |||||
| Terminal Value | 82,211 | |||||
| WACC / Discount Rate | 7.84% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,073 | 4,368 | 4,369 | 4,372 | 3,940 | 56,366 |
| Enterprise Value | 76,487 | |||||
| Projection Period | 20,121 | 26.3% | ||||
| Terminal Value | 56,366 | 73.7% | ||||
| (−) Current Net Debt | 32,418 | |||||
| Equity Value | 44,069 | |||||
| (÷) Outstanding Shares | 905M | |||||
| Fair Price | $49 | -19.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 10.4x | 12.4x | 14.4x | 16.4x | 18.4x |
|---|---|---|---|---|---|
| 5.8% | $37 | $46 | $56 | $65 | $75 |
| 6.8% | $34 | $43 | $52 | $61 | $70 |
| 7.8% | $31 | $40 | $49 | $57 | $66 |
| 8.8% | $29 | $37 | $45 | $54 | $62 |
| 9.8% | $26 | $34 | $42 | $50 | $58 |
Current price: $60.49. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.