IRM - Embedded Expectations Analysis - 2019 09 13
Iron Mountain Incorporated (IRM:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 24.6x Uniform P/E. At these levels, the market is pricing in expectations for Uniform ROA to remain stable. However, management may be concerned about their revenue, organic growth potential, and the sustainability of their business model.Specifically, management is confident the permanent withdrawal fees for transitioning customers from their competitors are substantial. Furthermore, they may be concerned about declining recycled paper pricing and the durability of their business model. Moreover, they may be concerned about continued headwinds to service revenue, and they may be concerned about the sustainability of their current lease-adjusted leverage ratio. In addition, they may be concerned about the value of their federal sub-agreement and about the timing of their Phoenix campus expansion. Finally, they may be exaggerating the value of their business wins in India, and they may be concerned about their customer acquisition costs.
Iron Mountain is a holding company. Through its subsidiaries, the company stores physical records and data backup media, providing information management solutions, and providing data center space for colocation and hyperscale deployments. The company's segments are: Global Records and Information Management Business, which provides records management, data management, information governance and digital solutions, secure shredding, and consumer storage; Global Data Center Business, which provides data center facilities; and Corporate and Other Business, which provides entertainment and media that helps industry clients store, safeguard and deliver physical media of various types.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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