Iron Mountain IRM is well poised for growth with strong cash flows in storage and records management business. Heightened focus on data-center business also acts as a tailwind. However, higher reliance on non-paper-based technologies and a slowdown in service activity are headwinds to the service segment.
Iron Mountain is supplementing its storage segment’s performance with expansion in its faster-growing businesses, most notable being the data center segment. Such moves will enable IRM to capitalize on strong demand for connectivity, interconnection and colocation space, and drive leasing activity. IRM signed a 20-megawatt multi-year lease for its VA-2 data center in Manassas, with an existing U.S.-based Fortune 100 customer.
Iron Mountain has an aggressive expansion strategy, including acquisition and developments, to supplement organic growth in storage revenues. IRM inked a deal to acquire ITRenew in December to boost its platform strength. The deal will help IRM capitalize on the large and growing IT asset disposition market.
The REIT also has a decent balance-sheet position. It has ample financial flexibility to meet its near-term debt obligations and other capital commitments, and pursue growth opportunities.
Additionally, in December, to enhance flexibility, Iron Mountain through its wholly-owned subsidiary Iron Mountain Information Management Services upsized the private placement of 5.000% senior notes due 2032 to $750 million from the previously announced $500 million.
However, archiving original hard-copy documents is losing its relevance, while paper needs are shrinking at the enterprise level. Moreover, shifts in data storage through non-paper-based technologies, are affecting the physical storage volume and eroding demand for the handling of records. This is reducing service activity levels and record management volume.
The records and information management services industry is highly fragmented with numerous competitors in North America and around the world. This is likely to induce aggressive pricing and will keep margins under pressure, going forward.
Shares of this currently Zacks Rank #3 (Hold) player have declined 1.5% over the past six months against the industry's growth of 1.1%. In addition the trend in estimate revisions for first quarter 2022 funds from operations (FFO) per share does not indicate a favorable outlook for the company, as it has witnessed a 1.4% downward revision over the past two months.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Extra Space Storage (NYSE:EXR) EXR, OUTFRONT Media OUT and CubeSmart CUBE.
Extra Space flaunts a Zacks Rank #1 (Strong Buy) at present. Shares of EXR have gained 18.4% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Extra Space’s 2021 FFO per share has been raised 2.8% over the past two months. Over the last four quarters, EXR’s FFO per share surpassed the consensus mark on all occasions, the average being 5.9%.
OUTFRONT Media flaunts a Zacks Rank of 1 at present. Shares of OUT have gained 6% in the past six months.
The Zacks Consensus Estimate for OUTFRONT Media’s 2021 FFO per share has been raised 11.2% over the past month. Over the last four quarters, OUT’s FFO per share surpassed the consensus mark on three occasions and came in line with the same in the remaining quarter, the average beat being 44.9%.
The Zacks Consensus Estimate for CubeSmart’s 2021 FFO per share has been raised 1.9% in the past two months. Over the last four quarters, CUBE’s FFO per share surpassed the consensus mark on all occasions, the average being 7.1%.
Currently, CUBE sports a Zacks Rank of 1. Shares of CubeSmart have appreciated 5.6% in the past six months.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
As one investor put it, “curing and preventing hundreds of diseases…what should that market be worth?” This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer (NYSE:SAM) Company which shot up +143.0% in little more than 9 months and NVIDIA (NASDAQ:NVDA) which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Iron Mountain Incorporated (NYSE:IRM): Free Stock Analysis Report
Extra Space Storage Inc (EXR): Free Stock Analysis Report
CubeSmart (CUBE): Free Stock Analysis Report
OUTFRONT Media Inc. (OUT): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research