Is it Wise to Retain Iron Mountain Stock in Your Portfolio Now?

Iron Mountain IRM is well-poised to gain from a recurring revenue business model and expansion efforts in the data center segment. A healthy balance sheet is likely to support the company’s growth endeavors over the long term. However, competition from industry peers and high interest expenses are its concerns.What’s Aiding IRM?Iron Mountain enjoys a steady stream of recurring revenues from its core storage and records management businesses. The company derives the majority of its revenues from fixed periodic (usually earned on a monthly basis) storage rental fees charged to customers based on the volume of their records stored.  Iron Mountain’s organic storage rental revenues increased 9.2% year over year in the second quarter of 2025. We estimate a year-over-year increase of 10.2% in storage rental revenues in 2025.Iron Mountain is supplementing its storage segment’s performance with expansion in its faster-growing businesses, most notably the data center segment. In February 2025, in a strategic partnership with Ooredoo Group, Iron Mountain announced it would take a minority equity stake in Ooredoo’s carrier-neutral data center company, MENA Digital Hub. This move, along with the past, will enable the company to capitalize on strong demand for connectivity, interconnection and colocation space and drive leasing activity.Moreover, in the second quarter of 2025, the company’s Global Data Center Business attained total revenue growth of 24%. In the second quarter of 2025, Iron Mountain had a total data center operating portfolio of 450 MW. The company expects to nearly triple its capacity to 1.3 GW once fully developed. For 2025, management expects Data Center revenues of nearly $800 million, which is approximately 30% growth.Iron Mountain maintains a strong balance sheet position. It had a weighted-average maturity of 4.5 years as of June 30, 2025. With this, it has ample financial flexibility to meet its near-term debt obligations and other capital commitments while pursuing growth opportunities. Iron Mountain ended the second quarter of 2025 with a net lease-adjusted leverage of 5.0X, the lowest level since before the company’s REIT conversion in 2014. For 2025, the company expects to end the year at similar levels to year-end 2024.What’s Hurting IRM?The records and information management services industry is highly fragmented with numerous competitors in North America and around the world. Although Iron Mountain offers compelling products and has a strong market position, the company faces significant competition. Going forward, this is likely to result in aggressive pricing and will keep margins under pressure.Despite the Federal Reserve announcing rate cuts in the second half of 2024, the interest rate is still high and is a concern for Iron Mountain. For 2025, our estimate indicates a year-over-year rise of 13.2% in the company’s net interest expenses. Substantial debt burden also adds to its woes. As of June 30, 2025, Iron Mountain’s net debt was approximately $15.48 billion.Shares of this Zacks Rank #3 (Hold) company have decreased 10.6% over the past three months against the industry's 1.7% growth. Image Source: Zacks Investment Research Stocks to ConsiderSome better-ranked stocks from the broader REIT sector are Plymouth Industrial REIT PLYM and Pebblebrook Hotel Trust PEB, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for PLYM’s 2025 FFO per share has moved 2 cents northward to $1.88 over the past month.The Zacks Consensus Estimate for PEB’s 2025 FFO per share has moved 3 cents downwards to $1.40 over the past week.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. 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Click to get this free report Iron Mountain Incorporated (IRM): Free Stock Analysis Report Pebblebrook Hotel Trust (PEB): Free Stock Analysis Report Plymouth Industrial REIT (PLYM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks