The Boston-based company provides storage and information management services in North America, Europe, Latin America, and the Asia Pacific.
The firm cited that acquiring Recall, a paper storage business, won't resolve IRM's chronic cash shortfall. While it should drive sizable synergies, acquiring it would mean greater exposure to deteriorating fundamentals and lingering chronic cash shortfall, Jefferies noted.
"IRM was once a beacon of stability, but steepening declines in paper usage and ever cheaper cloud storage should result in a further deterioration in IRM's already battered North America storage rental organic growth," analysts said.
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 some important positives, 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 notable return on equity, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, IRON MOUNTAIN INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for IRON MOUNTAIN INC is rather high; currently it is at 57.07%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, IRM's net profit margin of 5.48% significantly trails the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- IRM, with its decline in revenue, underperformed when compared the industry average of 8.5%. Since the same quarter one year prior, revenues slightly dropped by 2.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- IRON MOUNTAIN INC's earnings per share declined by 13.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, IRON MOUNTAIN INC increased its bottom line by earning $1.69 versus $0.52 in the prior year. For the next year, the market is expecting a contraction of 26.9% in earnings ($1.24 versus $1.69).
- You can view the full analysis from the report here: IRM Ratings Report