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What's in Store for Iron Mountain (IRM) This Earnings Season?

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Iron Mountain Incorporated (IRM - Free Report) is set to release second-quarter 2021 results on Aug 5, before the bell. The company’s quarterly results will likely display growth in both revenues and funds from operations (FFO) per share.

In the last reported quarter, the real estate investment trust (REIT) delivered a surprise of 26.56% in terms of adjusted FFO per share. Results reflected better-than-expected revenues in the quarter.

Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 18.42%. The graph below depicts this surprise history:

Iron Mountain Incorporated Price and EPS Surprise

Iron Mountain Incorporated Price and EPS Surprise

Iron Mountain Incorporated price-eps-surprise | Iron Mountain Incorporated Quote

Let’s see how things have shaped up prior to this announcement.

Factors to Note

Rising growth of data, rapid accelerations in cloud adoption and the boom in IT outsourcing demand have been spurring demand for data-center spaces. Moreover, new technologies like 5G and augmented reality have been creating opportunities for edge deployments and data-center operators. The strong demand for connectivity, interconnection and colocation spaces is anticipated to have driven data-center leasing activity for Iron Mountain. Amid the favorable backdrop, the company continued its portfolio expansion and data-center enhancement efforts in the quarter under review, thereby, driving revenues from the global data-center business.

Accordingly, the Zacks Consensus Estimate for second-quarter revenues from the global data-center business is pegged at $76 million, indicating an improvement from the $67 million seen in the prior year and the year-ago quarter.

Also, a steady stream of recurring revenues from its core storage and record management businesses is expected to have aided Iron Mountain in the second quarter. This, along with high box retention rate, is anticipated to have rendered storage rental revenue stability.

The consensus estimate for the same is pegged at $719 million for the second quarter, suggesting an improvement from the prior quarter’s $708 million and the year-ago period’s $677 million.

Moreover, the company’s quarterly results will likely display modest improvements in core service revenues. The consensus estimate for second-quarter service revenues is pegged at $378 million, which indicates an increase from the prior quarter’s $374 million and the year-ago quarter’s $305 million.

For the second quarter, management projects an increase in both revenues and adjusted EBITDA compared to the first quarter, while in terms of margin, it expects the figure to be down two to three points sequentially. This is because of pandemic-related construction delays and one-time build-out services for a specific customer. Particularly, management projects revenues to reach $1.1 billion and adjusted EBITDA to approach $400 million.

Overall, total revenues for the second quarter are pegged at $1.10 billion and the figure suggests a year-over-year increase of 11.7%.

Iron Mountain’s activities in the second quarter were inadequate to gain analyst confidence. The Zacks Consensus Estimate of 64 cents for the quarterly FFO per share has been unrevised over the past month. Nonetheless, the figure suggests year-over-year growth of 20.75%.

Here is what our quantitative model predicts:

Our proven model does not conclusively predict a surprise in terms of FFO per share for Iron Mountain this season. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of a FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Iron Mountain currently carries a Zacks Rank #3 (Hold) and has an Earnings ESP of 0.00%.

Stocks That Warrant a Look

Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report surprises this quarter:

Healthcare Trust of America, Inc. (HTA - Free Report) , scheduled to report quarterly numbers on Aug 5, currently has an Earnings ESP of +1.89% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Park Hotels & Resorts Inc. (PK - Free Report) , slated to release second-quarter numbers on Aug 5, has an Earnings ESP of +19.33% and carries a Zacks Rank of 3, at present.

OUTFRONT Media Inc. (OUT - Free Report) , set to announce quarterly results on Aug 5, currently has an Earnings ESP of +14.29% and carries a Zacks Rank of 3.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.