Shares of Iron Mountain (NYSE: IRM) soared 16.5% in February, in accordance with information supplied by S&P Global Market Intelligence. Driving up the actual property funding belief (REIT) was its robust fourth-quarter outcomes and bullish outlook for 2024.
Challenge Matterhorn is paying dividends
Iron Mountain reported quarterly and full-year data for income and adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) final month. Income grew 7% for the 12 months to just about $5.5 billion, whereas adjusted EBITDA additionally rose 7% to nearly $2 billion. The REIT centered on safe storage additionally delivered a 5% improve in its adjusted funds from operations (FFO) per share.
The corporate’s Challenge Matterhorn initiative, which it launched in late 2022, is delivering the anticipated development acceleration. The corporate’s investments in information facilities are serving to increase development. It leased 124 megawatts of information middle capability final 12 months, which is able to assist set the stage for extra development in 2024.
The REIT additionally launched its 2024 steering final month. “We’re nicely positioned to proceed our development trajectory in 2024, which is mirrored in our monetary steering for double-digit income development,” stated CEO William Meaney within the fourth-quarter report. Iron Mountain expects income to climb 11% to greater than $6 billion whereas adjusted EBITDA will improve by 12% to round $2.2 billion. In the meantime, its adjusted FFO will rise by about 8% per share. The corporate expects Challenge Matterhorn to proceed propelling its development. Iron Mountain may also get a lift from its lately closed acquisition of Regency Applied sciences, which is able to improve its asset lifecycle administration capabilities.
Iron Mountain stays in a superb place to proceed rising briskly because of the strong demand for information middle capability. Cloud computing and different catalysts like AI are accelerating demand for information middle capability. That ought to allow Iron Mountain to proceed rising its world information middle platform at a wholesome fee.
Is Iron Mountain a purchase after final month’s rally?
Iron Mountain trades at lower than 17 instances its 2024 FFO estimate after final month’s rally. Whereas it isn’t as low cost because it was, it is nonetheless one of the least expensive ways to invest in the data center megatrend. The corporate’s comparatively low worth has it providing a lovely dividend (at present yielding 3.2%) that ought to proceed rising (it gave traders a 5% elevate final 12 months). The corporate additionally has a powerful stability sheet, with its 5.1 instances leverage ratio close to its lowest degree in a decade. That provides it the pliability to proceed investing in Matterhorn initiatives that speed up its development, which ought to create extra worth for traders over the long run. These elements make Iron Mountain a lovely long-term funding alternative lately.
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Matt DiLallo has positions in Iron Mountain. The Motley Idiot has positions in and recommends Iron Mountain. The Motley Idiot has a disclosure policy.
Why Iron Mountain Stock Surged 16.5% in February was initially revealed by The Motley Idiot
