We've been asking ourselves recently if the market has placed a fair valuation on Iron Mountain. Let's dive into some of the fundamental values of this large-cap Real Estate company to determine if there might be an opportunity here for value-minded investors.
Iron Mountain's Valuation Is in Line With Its Sector Averages:
Iron Mountain Incorporated (NYSE: IRM) is a global leader in innovative storage, data center infrastructure, asset lifecycle management and information management services. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 24.81 and an average price to book (P/B) ratio of 2.24. In contrast, Iron Mountain has a trailing 12 month P/E ratio of 28.3 and a P/B ratio of 30.97.
Iron Mountain's PEG ratio is 5.06, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues With Increasing Reinvestment in the Business:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $4,263 | $4,147 | $4,492 | $5,104 |
| Operating Margins | 18.3% | 19.0% | 20.1% | 20.5% |
| Net Margins | 6.27% | 8.26% | 10.02% | 10.91% |
| Net Income (MM) | $267 | $343 | $450 | $557 |
| Net Interest Expense (MM) | -419 | -419 | -418 | -488 |
| Net Interest Expense (MM) | -$419 | -$419 | -$418 | -$488 |
| Depreciation & Amort. (MM) | -$658 | -$652 | -$680 | -$746 |
| Earnings Per Share | $0.93 | $1.19 | $1.55 | $2.05 |
| EPS Growth | n/a | 27.96% | 30.25% | 32.26% |
| Diluted Shares (MM) | 288 | 289 | 291 | 292 |
| Free Cash Flow (MM) | $218 | $534 | $135 | $44 |
| Capital Expenditures (MM) | -$748 | -$453 | -$624 | -$884 |
| Net Current Assets (MM) | -$11,116 | -$11,743 | -$12,152 | -$13,957 |
| Current Ratio | 0.63 | 0.64 | 0.71 | 0.81 |
| Long Term Debt (MM) | $8,276 | $8,510 | $8,963 | $10,481 |
| Net Debt / EBITDA | 6.03 | 5.89 | 5.23 | 5.76 |
Iron Mountain has growing revenues and increasing reinvestment in the business, exceptional EPS growth, and generally positive cash flows. However, the firm has a highly leveraged balance sheet. Finally, we note that Iron Mountain has weak operating margings with a stable trend.
