NEW YORK ( TheStreet) -- Iron Mountain Inc (NYSE: IRM) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and generally poor debt management. Highlights from the ratings report include:
- IRM's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Services & Supplies industry. The net income increased by 511.9% when compared to the same quarter one year prior, rising from $41.29 million to $252.68 million.
- Powered by its strong earnings growth of 33.33% and other important driving factors, this stock has surged by 45.96% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Commercial Services & Supplies industry and the overall market, IRON MOUNTAIN INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has declined marginally to $123.72 million or 9.64% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, IRON MOUNTAIN INC has marginally lower results.