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Digital Realty Stock Ahead of Q3 Earnings: Smart Buy or Risky Move?
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Key Takeaways
Digital Realty's Q3 revenues are projected to rise 10.6% year over year to $1.74 billion.
A record $1.90 billion backlog and $635 million in planned lease commencements support growth.
Core FFO is estimated at $1.97 per share, up 4.2% year over year, with renewal spreads of 9-11%.
Digital Realty Trust (DLR - Free Report) is slated to report third-quarter 2026 results on Oct. 29, after the closing bell. The quarterly results are expected to reflect year-over-year growth in both revenues and funds from operations (FFO) per share.
This Austin, TX-based data center real estate investment trust (REIT) reported a core FFO per share of $2.13 in the prior quarter, surpassing the Zacks Consensus Estimate of $1.98. Strong bookings, a record backlog and sharp renewal rent increases supported the quarter.
Over the trailing four quarters, Digital Realty’s core FFO per share topped the Zacks Consensus Estimate on all occasions, with the average beat being 5.14%. This is depicted in the chart below:
Digital Realty is expected to have sustained strong growth in the third quarter of 2026, supported by robust leasing activity, a record backlog and rising demand for AI- and cloud-related data center capacity. The company entered the quarter with a record $1.90 billion backlog and strong renewal pricing momentum, aided by constrained supply in key markets.
Revenues should benefit from $635 million of annualized lease commencements scheduled for the second half of 2026, with 45% expected in the third quarter. Positive cash renewal spreads, projected at 9-11% for 2026, and continued growth in colocation, interconnection and hyperscale leasing should support operating performance.
For the third quarter, the Zacks Consensus Estimate for rental revenues is pegged at $1.18 billion, up 12.7% from $1.05 billion reported in the year-ago quarter. The Zacks Consensus Estimate for interconnection & other revenues currently stands at $132.3 million, indicating a 9.8% increase from the year-ago quarter.
The consensus estimate for quarterly total revenues is pegged at $1.74 billion, calling for a 10.6% year-over-year jump.
Digital Realty’s activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the company’s quarterly FFO per share has been revised downward to $1.97 over the past month. However, the figure indicates year-over-year growth of 4.2%.
What Our Quantitative Model Predicts for DLR
Our proven model does not conclusively predict a surprise in terms of FFO per share for Digital Realty this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Digital Realty currently has an Earnings ESP of -0.19% and carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two stocks from the broader REIT sector, Innovative Industrial Properties (IIPR - Free Report) and Host Hotels & Resorts (HST - Free Report) , which you may want to consider, as our model shows that these have the right combination of elements to report an FFO beat this quarter.
Innovative Industrial Properties is slated to report quarterly numbers on Nov. 2. IIPR has an Earnings ESP of +1.64% and carries a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Host Hotels & Resorts is slated to report quarterly numbers on Nov. 4. HST has an Earnings ESP of +3.20% and a Zacks Rank of 3 at present.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
View the Zacks #1 Rank List
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Digital Realty Stock Ahead of Q3 Earnings: Smart Buy or Risky Move?
Key Takeaways
Digital Realty Trust (DLR - Free Report) is slated to report third-quarter 2026 results on Oct. 29, after the closing bell. The quarterly results are expected to reflect year-over-year growth in both revenues and funds from operations (FFO) per share.
This Austin, TX-based data center real estate investment trust (REIT) reported a core FFO per share of $2.13 in the prior quarter, surpassing the Zacks Consensus Estimate of $1.98. Strong bookings, a record backlog and sharp renewal rent increases supported the quarter.
Over the trailing four quarters, Digital Realty’s core FFO per share topped the Zacks Consensus Estimate on all occasions, with the average beat being 5.14%. This is depicted in the chart below:
Digital Realty Trust, Inc. Price and EPS Surprise
Digital Realty Trust, Inc. price-eps-surprise | Digital Realty Trust, Inc. Quote
Factors at Play and Projections for DLR
Digital Realty is expected to have sustained strong growth in the third quarter of 2026, supported by robust leasing activity, a record backlog and rising demand for AI- and cloud-related data center capacity. The company entered the quarter with a record $1.90 billion backlog and strong renewal pricing momentum, aided by constrained supply in key markets.
Revenues should benefit from $635 million of annualized lease commencements scheduled for the second half of 2026, with 45% expected in the third quarter. Positive cash renewal spreads, projected at 9-11% for 2026, and continued growth in colocation, interconnection and hyperscale leasing should support operating performance.
For the third quarter, the Zacks Consensus Estimate for rental revenues is pegged at $1.18 billion, up 12.7% from $1.05 billion reported in the year-ago quarter. The Zacks Consensus Estimate for interconnection & other revenues currently stands at $132.3 million, indicating a 9.8% increase from the year-ago quarter.
The consensus estimate for quarterly total revenues is pegged at $1.74 billion, calling for a 10.6% year-over-year jump.
Digital Realty’s activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the company’s quarterly FFO per share has been revised downward to $1.97 over the past month. However, the figure indicates year-over-year growth of 4.2%.
What Our Quantitative Model Predicts for DLR
Our proven model does not conclusively predict a surprise in terms of FFO per share for Digital Realty this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Digital Realty currently has an Earnings ESP of -0.19% and carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two stocks from the broader REIT sector, Innovative Industrial Properties (IIPR - Free Report) and Host Hotels & Resorts (HST - Free Report) , which you may want to consider, as our model shows that these have the right combination of elements to report an FFO beat this quarter.
Innovative Industrial Properties is slated to report quarterly numbers on Nov. 2. IIPR has an Earnings ESP of +1.64% and carries a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Host Hotels & Resorts is slated to report quarterly numbers on Nov. 4. HST has an Earnings ESP of +3.20% and a Zacks Rank of 3 at present.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.