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Iron Mountain (IRM) to Post Q1 Earnings: What's in Store?
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Iron Mountain Incorporated (IRM - Free Report) is slated to release first-quarter 2023 results on May 4, before the opening bell. The company’s quarterly results are likely to display year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this real estate investment trust (REIT) delivered a surprise of 4.26% in terms of adjusted FFO (AFFO) per share. Its results reflected solid performance in the storage and service segments, and the data-center business. However, higher operating expenses in the quarter were a headwind.
Over the trailing four quarters, Iron Mountain’s FFO per share surpassed the Zacks Consensus Estimate on each occasion, the average beat being 9.36%. The graph below depicts this surprise history:
Iron Mountain’s first-quarter earnings are likely to have benefited from its stable and resilient core storage and records management businesses. It derives the majority of its revenues from fixed periodic (usually earned on a monthly basis) storage rental fees charged to customers based on the volume of their records stored. Also, we expect the company to have maintained a high customer retention rate during the quarter.
Additionally, Iron Mountain’s diversified tenant and revenue base across different industries and geographical locations is likely to have been a boon.
These are expected to have led to stable storage rental revenue generation during the quarter, boosting its top line. The Zacks Consensus Estimate for storage rental revenues is pegged at $783.1 million, suggesting a 1.8% improvement from the prior quarter’s $769.5 million and 4.3% from the year-ago period’s $751.1 million. Our estimate for the same suggests an increase of 3.7% year over year.
The company’s service revenues, which comprise charges for related core service activities and a wide array of complementary products and services, are expected to have improved during the quarter.
The consensus estimate for service revenues is pegged at $531.5 million, indicating a rise of 4.3% from the prior quarter’s $509.6 million and an increase of 6.9% from the year-ago quarter’s $496.9 million. Our estimate for the same indicates growth of 7.6% year over year.
IRM is anticipated to have continued expanding its fast-growing businesses, especially the data center segment, to supplement its storage segment performance during the quarter. Further, strong demand for connectivity, interconnection and colocation space is likely to have driven data center leasing activity.
In its fourth-quarter 2022 earnings presentation, management projected total revenues to be around $1.3 billion, adjusted EBITDA to be roughly $460 million, AFFO to be nearly $270 million and AFFO per share to be 92 cents for the first quarter of 2023.
The consensus estimate for first-quarter total revenues is pegged at $1.31 billion, suggesting a year-over-year increase of 5.2%.
Further, we expect IRM’s solid balance sheet to have aided its acquisition and development activities during the quarter.
However, given that a major part of the company’s business lies outside the United States, adverse foreign exchange movements might have cast a pall on its quarterly performance.
The Zacks Consensus Estimate for the quarterly FFO per share has been unchanged at 93 cents over the past two months. Nonetheless, the figure suggests a year-over-year increase of 2.2%.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an FFO beat for Iron Mountain this time. The right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that is not the case here.
Earnings ESP: IRM has an Earnings ESP of -0.81%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Federal Realty Investment Trust (FRT - Free Report) is scheduled to report quarterly figures on May 4. FRT has an Earnings ESP of +0.57% and a Zacks Rank of 3 currently.
Americold Realty Trust (COLD - Free Report) is scheduled to report quarterly figures on May 4. COLD currently has an Earnings ESP of +17.72% and a Zacks Rank #2 (Buy).
Agree Realty (ADC - Free Report) is scheduled to report quarterly figures on May 4. ADC currently has an Earnings ESP of +0.59% and a Zacks Rank #3.
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Iron Mountain (IRM) to Post Q1 Earnings: What's in Store?
Iron Mountain Incorporated (IRM - Free Report) is slated to release first-quarter 2023 results on May 4, before the opening bell. The company’s quarterly results are likely to display year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this real estate investment trust (REIT) delivered a surprise of 4.26% in terms of adjusted FFO (AFFO) per share. Its results reflected solid performance in the storage and service segments, and the data-center business. However, higher operating expenses in the quarter were a headwind.
Over the trailing four quarters, Iron Mountain’s FFO per share surpassed the Zacks Consensus Estimate on each occasion, the average beat being 9.36%. The graph below depicts this surprise history:
Iron Mountain Incorporated Price and EPS Surprise
Iron Mountain Incorporated price-eps-surprise | Iron Mountain Incorporated Quote
Factors to Note
Iron Mountain’s first-quarter earnings are likely to have benefited from its stable and resilient core storage and records management businesses. It derives the majority of its revenues from fixed periodic (usually earned on a monthly basis) storage rental fees charged to customers based on the volume of their records stored. Also, we expect the company to have maintained a high customer retention rate during the quarter.
Additionally, Iron Mountain’s diversified tenant and revenue base across different industries and geographical locations is likely to have been a boon.
These are expected to have led to stable storage rental revenue generation during the quarter, boosting its top line. The Zacks Consensus Estimate for storage rental revenues is pegged at $783.1 million, suggesting a 1.8% improvement from the prior quarter’s $769.5 million and 4.3% from the year-ago period’s $751.1 million. Our estimate for the same suggests an increase of 3.7% year over year.
The company’s service revenues, which comprise charges for related core service activities and a wide array of complementary products and services, are expected to have improved during the quarter.
The consensus estimate for service revenues is pegged at $531.5 million, indicating a rise of 4.3% from the prior quarter’s $509.6 million and an increase of 6.9% from the year-ago quarter’s $496.9 million. Our estimate for the same indicates growth of 7.6% year over year.
IRM is anticipated to have continued expanding its fast-growing businesses, especially the data center segment, to supplement its storage segment performance during the quarter. Further, strong demand for connectivity, interconnection and colocation space is likely to have driven data center leasing activity.
In its fourth-quarter 2022 earnings presentation, management projected total revenues to be around $1.3 billion, adjusted EBITDA to be roughly $460 million, AFFO to be nearly $270 million and AFFO per share to be 92 cents for the first quarter of 2023.
The consensus estimate for first-quarter total revenues is pegged at $1.31 billion, suggesting a year-over-year increase of 5.2%.
Further, we expect IRM’s solid balance sheet to have aided its acquisition and development activities during the quarter.
However, given that a major part of the company’s business lies outside the United States, adverse foreign exchange movements might have cast a pall on its quarterly performance.
The Zacks Consensus Estimate for the quarterly FFO per share has been unchanged at 93 cents over the past two months. Nonetheless, the figure suggests a year-over-year increase of 2.2%.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an FFO beat for Iron Mountain this time. The right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that is not the case here.
Earnings ESP: IRM has an Earnings ESP of -0.81%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: IRM currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Federal Realty Investment Trust (FRT - Free Report) is scheduled to report quarterly figures on May 4. FRT has an Earnings ESP of +0.57% and a Zacks Rank of 3 currently.
Americold Realty Trust (COLD - Free Report) is scheduled to report quarterly figures on May 4. COLD currently has an Earnings ESP of +17.72% and a Zacks Rank #2 (Buy).
Agree Realty (ADC - Free Report) is scheduled to report quarterly figures on May 4. ADC currently has an Earnings ESP of +0.59% and a Zacks Rank #3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.