Iron Mountain Stays Neutral - Analyst Blog
October 03 2011 - 10:11AM
Zacks
We reiterate our long-term Neutral recommendation on
Iron Mountain Inc. (IRM). The company reported
second quarter 2011 earnings that were in line with the Zacks
Consensus Estimate.
Though revenues increased on a year-over-year basis, they missed
the Zacks Consensus Estimate. Results were driven by continued
strong performance in the storage segment, which benefited from
strength in the International Physical segment and sustained growth
in the North Americabusiness.
Positives were derived from higher new product sales and lower
destruction rates in the Global records management services.
The company expects revenues to grow in the range of 7% to 12%
from 2011 to 2014. Management expects organic growth rates to
average 6% to 10% over the next five years, driven by core volume
growth and an increasing contribution from pricing, as the company
leverages its scale and global presence.
We believe the company can reach its goals and deliver strong
revenue growth through its recurring revenue model that generates
steady margins and earnings momentum. International expansion,
particularly in low-cost areas such as India, China, Russia and
Brazil, are also expected to help.
However, increased selling, general and administrative expense
from the comparable previous year and the massive debt balance
(over 46.0% of its total asset balance) in Iron Mountain’s balance
sheet will affect its operating results. Additionally, Iron
Mountain has issued debt worth $400 million through Senior
Subordinated Notes due in 2019. The fresh debt will further
leverage Iron Mountain’s balance sheet.
Although Iron Mountain offers compelling products and has a
strong market position, the company faces stiff competition from
Equifax Inc. (EFX), R.R. Donnelley &
Sons Co. (RRD), Dun & Bradstreet
Corp. (DNB) and Hewitt Associates Inc. In order to compete
aggressively, IronMountainmay lower its price point leading to
severe pricing pressure.
Currently, Iron Mountain has a Zacks #3 Rank, implying a
short-term Hold rating.
DUN &BRADST-NEW (DNB): Free Stock Analysis Report
EQUIFAX INC (EFX): Free Stock Analysis Report
IRON MOUNTAIN (IRM): Free Stock Analysis Report
DONNELLEY (RR) (RRD): Free Stock Analysis Report
Zacks Investment Research
Donnelley (R.R.) & Sons Co. (NYSE:RRD.WI)
Historical Stock Chart
From Jul 2024 to Aug 2024
Donnelley (R.R.) & Sons Co. (NYSE:RRD.WI)
Historical Stock Chart
From Aug 2023 to Aug 2024