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What's in the Offing for Iron Mountain's (IRM) Q3 Earnings?

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  • IRM

Iron Mountain Incorporated IRM is set to release third-quarter 2021 results on Nov 4, before the bell. The company’s quarterly results will likely highlight growth in both revenues and funds from operations (FFO) per share.

In the last reported quarter, the real estate investment trust (REIT) delivered a surprise of 32.81% in terms of adjusted FFO per share. Results displayed better-than-expected revenues during the quarter.

Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the average beat being 20.07%. 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

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

Factors to Note

High growth in cloud computing, Internet of Things and big data, and an elevated demand for third-party IT infrastructure are spurring demand for data-center infrastructure. Growth in artificial intelligence, autonomous vehicle and virtual/augmented reality markets has been creating a robust base for data centers. Amid these, the demand for data-center space is likely to have been healthy during third-quarter 2021.

Hence, being infrastructure providers for this rapidly-growing digital economy, data-center landlords, such as Iron Mountain, Equinix, Inc EQIX, CyrusOne Inc. CONE and CoreSite Realty Corporation COR, are well placed for sustainable growth.

Amid the favorable backdrop, Iron Mountain continued its portfolio expansion and data-center enhancement efforts during the quarter under review, thereby, driving revenues from the global data-center business. In an effort to boost its EMEA data-center footprint, the company inked an agreement to acquire a data center in Frankfurt from Singapore-based Calcium DC Pte. Ltd in July.

A strong demand for connectivity, interconnection and colocation spaces is anticipated to have driven the data-center leasing activity for Iron Mountain. In August, the company signed a 2.4-megawatt lease with a leading hyperscale enterprise software provider.

A steady stream of recurring revenues from its core storage and record management businesses is also expected to have aided Iron Mountain in the third quarter. This, along with high box retention rate, is likely to have rendered storage rental revenue stability.

The consensus estimate for the total storage rental revenues is pegged at $732 million for the third quarter, suggesting a 1.9% improvement from the prior quarter. The figure also displays a 5.2% increase from the year-ago period.

The company’s quarterly results will likely display modest improvement in the core service revenues. The consensus estimate for service revenues is pegged at $399 million, which indicates a 17.4% increase from the year-ago quarter.

Overall, the total revenues for the third quarter are pegged at $1.13 billion, suggesting a year-over-year increase of 19.2%.

However, Iron Mountain’s activities prior to the third-quarter earnings release were inadequate to gain analyst confidence. The Zacks Consensus Estimate of 70 cents for the quarterly FFO per share has been unrevised over the past month. The figure suggests year-over-year growth of 14.8%.

Here is what our quantitative model predicts:

We cannot conclusively predict that Iron Mountain will be able to beat the Zacks Consensus Estimate this time. This is because the company doesn't have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Iron Mountain has an Earnings ESP of 0.00%

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.

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.

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

Equinix, Inc. (EQIX) : Free Stock Analysis Report

Iron Mountain Incorporated (IRM) : Free Stock Analysis Report

CoreSite Realty Corporation (COR) : Free Stock Analysis Report

CyrusOne Inc (CONE) : Free Stock Analysis Report

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