Iron Mountain (IRM): Today's Weak On High Volume Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Iron Mountain ( IRM) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Iron Mountain as such a stock due to the following factors:

  • IRM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $54.9 million.
  • IRM has traded 301,796 shares today.
  • IRM is trading at 2.86 times the normal volume for the stock at this time of day.
  • IRM is trading at a new low 5.02% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on IRM:

Iron Mountain Incorporated, together with its subsidiaries, provides storage and information management services in North America, Europe, Latin America, and the Asia Pacific. The stock currently has a dividend yield of 5.2%. IRM has a PE ratio of 22. Currently there are 4 analysts that rate Iron Mountain a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Iron Mountain has been 1.6 million shares per day over the past 30 days. Iron Mountain has a market cap of $7.7 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.32 and a short float of 6.8% with 7.99 days to cover. Shares are down 4.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Iron Mountain as a buy. 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 ratings report include:
  • 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).

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