It has been about a month since the last earnings report for Iron Mountain (IRM - Free Report) . Shares have added about 3.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Iron Mountain due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Iron Mountain Surpasses Q2 FFO & Revenue Estimates
Iron Mountain reported second-quarter 2020 normalized FFO per share of 53 cents, beating the Zacks Consensus Estimate of 42 cents. However, the reported figure was 1.9% lower than the year-ago quarter’s 54 cents.
Revenues of $982.2 million declined 7.9% year over year, outpacing the Zacks Consensus Estimate of $918.3 million.
Results reflect strength in the company’s core storage business. However, amid the coronavirus outbreak-led concerns, the service segment‘s performance was disappointing.
Adjusted FFO increased 19% year over year to $249.5 million.
Storage rental revenues were $677 million in the June-end quarter, highlighting a 3.7% year-over-year increase on a constant-currency basis. The company recorded 2.3% organic growth year over year.
Service revenues amounted to $305 million in the reported quarter, indicating a year-over-year fall of 21.3% on a constant-currency basis. Further, organic service revenues declined 23.1% year over year.
Adjusted EBITDA margin expanded 200 basis points to 34.9%.
The company exited the second quarter with $907.2 million of cash and cash equivalents, up from $193.5 million recorded at 2019 end.
As of the second-quarter end, the company had total liquidity of $1.2 billion, pro forma for redemption of $1 billion of 2024 notes on Jul 2.
Project Summit Update
Iron Mountain’s transformation program — Project Summit — focuses on simplifying its global structure, streamlining managerial structure for the future and enhancing customer experience.
Project Summit is now anticipated to deliver annual adjusted EBITDA benefits of $375 million, exiting 2021. The total cost to implement the program is estimated to be approximately $450 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 5.58% due to these changes.
At this time, Iron Mountain has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Iron Mountain has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.