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Why It Is Wise to Hold Iron Mountain (IRM) Stock for Now
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Iron Mountain (IRM - Free Report) is well poised for growth on the back of its expansion projects and developments. However, higher reliance on non-paper-based technologies and slowdown in service activity are affecting the service segment’s performance.
The company’s focus on data-enter portfolio expansion will diversify the company’s revenue mix and improve adjusted EBITDA margins. It has entered into a EUR 76-million agreement to acquire a data center in Frankfurt from Singapore-based Calcium DC Pte. Ltd.
Recently, Iron Mountain signed a 10-year 2.4-megawatt lease with a Fortune 100 tech customer at its WPA-1 facility in Pennsylvania. Through the first seven months of 2021, the company has leased 19 megawatts of capacity at its global data-center portfolio.
A diversified tenant base also helps the company enjoy a steady revenue stream.
Moreover, strength in its core storage and record management businesses acts as a tailwind. Iron Mountain has a steady stream of recurring revenues from the business, deriving the majority of its revenues from fixed periodic storage rental fees charged to customers based on the volume of their records stored. Higher volume in faster-growing markets and efficient revenue-management efforts resulted in robust organic growth for its storage rental revenues.
Iron Mountain has ample financial flexibility to meet its near-term debt obligations and other capital commitments, while pursuing growth opportunities. Specifically, it had total liquidity of $2.1 billion as of Jun 30, 2021, including cash and cash equivalents of $315.9 million.
Shares of this Zacks Rank #3 (Hold) company have gained 40.8% over the past three months, outperforming the industry's growth of 18.5%. In addition the trend in estimate revisions for 2021 funds from operations (FFO) per share indicates a favorable outlook for the company, as it has witnessed 4.5% upward revision in the past week.
Image Source: Zacks Investment Research
However, archiving of original hard-copy documents is losing its relevance, while paper needs are shrinking at the enterprise level. These, along with shifts in data storage through non-paper-based technologies, are affecting physical storage volume and eroding demand for the handling of records. This is reducing service activity levels and record management volume.
In addition, the digitization of records might shift its revenue mix from the more predictable storage revenues to service revenues, which are more volatile.
Extra Space Storage Inc’s (EXR - Free Report) Zacks Consensus Estimate for 2021 FFO per share has moved 1.3% north to $6.42 over the past month. The company currently carries a Zacks Rank of 2.
Arbor Realty Trust (ABR - Free Report) carries a Zacks Rank of 2, at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised around 38% upward in a week to 44 cents.
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.
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Why It Is Wise to Hold Iron Mountain (IRM) Stock for Now
Iron Mountain (IRM - Free Report) is well poised for growth on the back of its expansion projects and developments. However, higher reliance on non-paper-based technologies and slowdown in service activity are affecting the service segment’s performance.
The company’s focus on data-enter portfolio expansion will diversify the company’s revenue mix and improve adjusted EBITDA margins. It has entered into a EUR 76-million agreement to acquire a data center in Frankfurt from Singapore-based Calcium DC Pte. Ltd.
Recently, Iron Mountain signed a 10-year 2.4-megawatt lease with a Fortune 100 tech customer at its WPA-1 facility in Pennsylvania. Through the first seven months of 2021, the company has leased 19 megawatts of capacity at its global data-center portfolio.
A diversified tenant base also helps the company enjoy a steady revenue stream.
Moreover, strength in its core storage and record management businesses acts as a tailwind. Iron Mountain has a steady stream of recurring revenues from the business, deriving the majority of its revenues from fixed periodic storage rental fees charged to customers based on the volume of their records stored. Higher volume in faster-growing markets and efficient revenue-management efforts resulted in robust organic growth for its storage rental revenues.
Iron Mountain has ample financial flexibility to meet its near-term debt obligations and other capital commitments, while pursuing growth opportunities. Specifically, it had total liquidity of $2.1 billion as of Jun 30, 2021, including cash and cash equivalents of $315.9 million.
Shares of this Zacks Rank #3 (Hold) company have gained 40.8% over the past three months, outperforming the industry's growth of 18.5%. In addition the trend in estimate revisions for 2021 funds from operations (FFO) per share indicates a favorable outlook for the company, as it has witnessed 4.5% upward revision in the past week.
Image Source: Zacks Investment Research
However, archiving of original hard-copy documents is losing its relevance, while paper needs are shrinking at the enterprise level. These, along with shifts in data storage through non-paper-based technologies, are affecting physical storage volume and eroding demand for the handling of records. This is reducing service activity levels and record management volume.
In addition, the digitization of records might shift its revenue mix from the more predictable storage revenues to service revenues, which are more volatile.
Stocks to Consider
CubeSmart’s (CUBE - Free Report) FFO per share estimate for the current year have moved up 3.1% to $1.98 in the past week. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Extra Space Storage Inc’s (EXR - Free Report) Zacks Consensus Estimate for 2021 FFO per share has moved 1.3% north to $6.42 over the past month. The company currently carries a Zacks Rank of 2.
Arbor Realty Trust (ABR - Free Report) carries a Zacks Rank of 2, at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised around 38% upward in a week to 44 cents.
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.