Iron Mountain Inc. (IRM - Free Report) is set to release fourth-quarter 2017 results on Feb 16.
Last quarter, normalized funds from operations (FFO) of 55 cents per share lagged the Zacks Consensus Estimate by a penny. Moreover, the company delivered an average negative surprise of 0.63% in the trailing four quarters.
However, FFO increased 10% year over year driven by 2.4% increase in revenues, which totaled $966 million. The figure beat the consensus mark of $958 million.
The strong year-over-year performance can primarily be attributed to synergies from Recall Holdings acquisition, transformation initiatives and continued strong performance of its storage rental business.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
Iron Mountain’s strong product portfolio, increasing market share and promising international business are key catalysts.
The company is investing a lot in setting up data center business. Notably, the acquisition of FORTRUST will add 9 MW of existing capacity and opportunity for further expansion in the future.
Combined with the data center facility in North Virginia, the company will have 30 megawatts of capacity by year end, per management. Moreover, Iron Mountain’s announcement to acquire data centers in London and Singapore will help it gain ground in the international markets.
Further, the acquisition of OEC Records Management significantly expands the company’s presence in India. The acquisition adds 16 facilities in 10 cities and 3.6 million cubic feet of storage.
However, Iron Mountain’s Service revenues remain modest due to falling activity rates as stored records are becoming less active. Further, the company’s highly-leveraged balance sheet remains a concern.
Our proven model does not conclusively show that Iron Mountain is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Iron Mountain’s Earnings ESP is 0.00%. The Zacks Consensus Estimate is currently pegged at 57 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Iron Mountain carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 and 5 (Sell rated) going into the earnings announcement.
Stocks That Warrant a Look
Here are other stocks that you may want to consider as our model shows that they have the right combination of elements to deliver an earnings beat in their upcoming release.
Micron Technology (MU - Free Report) has an Earnings ESP of +1.83% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Broadcom (AVGO - Free Report) has an Earnings ESP of +1.08% and a Zacks Rank #2.
Fitbit (FIT - Free Report) has an Earnings ESP of +100% and a Zacks Rank #3.
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