NEW YORK (TheStreet) -- Shares of Iron Mountain Inc. (IRM) are surging 16.22% to $34.60 in after-hours trading on Wednesday after its board unanimously approved the company's conversion to a REIT, or real estate investment trust, for the taxable year beginning January 1, following the receipt of favorable private letter rulings from the IRS.
Additionally, Iron Mountain expects its full-year 2014 annual distribution as a REIT to be $400 to $420 million, excluding the 2014 special distribution, compared with the current projected annual dividend of approximately $207 million.
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Separately, TheStreet Ratings team rates IRON MOUNTAIN INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate IRON MOUNTAIN INC (IRM) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, increase in stock price during the past year, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 114.9% when compared to the same quarter one year prior, rising from $19.39 million to $41.67 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 3.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- IRON MOUNTAIN INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, IRON MOUNTAIN INC reported lower earnings of $0.51 versus $1.05 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus $0.51).
- The gross profit margin for IRON MOUNTAIN INC is rather high; currently it is at 56.48%. Regardless of IRM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.41% trails the industry average.
- You can view the full analysis from the report here: IRM Ratings Report