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

Zacks Equity Research
·4 min read

Iron Mountain Incorporated IRM is set to release second-quarter 2022 results on Aug 4 before the 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 30% in terms of adjusted FFO per share. Both the service and storage segments delivered solid performances in the quarter, while the data center business witnessed continued momentum.

Over the trailing four quarters, Iron Mountain’s FFO per share surpassed the Zacks Consensus Estimate on each occasion, the average beat being 17.48%. 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 and EPS Surprise

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

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

Factors to Note

Iron Mountain’s second-quarter results are likely to reflect a steady stream of recurring revenues from its core storage and record management businesses. This, along with the high box retention rate, is anticipated to have rendered storage rental revenue stability.

The consensus estimate for the same is pegged at $775.05 million for the second quarter, suggesting an improvement from the prior quarter’s $751.07 million and the year-ago period’s $718.27 million.

Moreover, IRM’s quarterly results are likely to display an improvement in core service revenues. The consensus estimate for second-quarter service revenues is pegged at $525.19 million. It indicates growth from the prior quarter’s $496.98 million and also calls for an increase from the year-ago quarter’s $401.48 million.

Moreover, the growth of data, accelerations in cloud adoption and the boom in IT outsourcing demand have spurred the demand for data center spaces. New technologies, such as 5G and augmented reality, have been creating opportunities for edge deployment 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.

For the second quarter, management projected total revenues of $1.3 billion, adjusted EBITDA of approximately $450 million and adjusted FFO of around $260 million.

Overall, total revenues for the second quarter are pegged at $1.3 billion, suggesting a year-over-year increase of nearly 16%.

Iron Mountain’s activities in the second quarter were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate of 92 cents for the quarterly FFO per share has remained unrevised over the past month. However, the figure suggests a year-over-year increase of 8.24%.

Here Is What Our Quantitative Model Predicts:

Our proven model does not conclusively predict an FFO beat for IRM 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 an FFO beat. However, that is not the case here.

Earnings ESP: Iron Mountain has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Iron Mountain currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of REITs

Crown Castle International Corp. CCI reported second-quarter 2022 adjusted FFO per share of $1.80. The Zacks Consensus Estimate for the same was pegged at $1.79. Also, net revenues of $1.73 billion exceeded the Zacks Consensus Estimate of $1.71 billion. Growth in site-rental revenues due to elevated tower space demand aided Crown Castle International’s top line.

American Tower Corporation AMT reported second-quarter 2022 consolidated adjusted FFO per share of $2.59 per share, which surpassed the Zacks Consensus Estimate of $2.35. The bottom line improved 7% year over year. Results reflected improving revenues across its Property segment. American Tower also recorded decent year-over-year organic tenant billings growth of 2.6% and total tenant billings growth of 7.8%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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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American Tower Corporation (AMT) : Free Stock Analysis Report
 
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