Shares of Iron Mountain (IRM +0.63%) soared 16.5% in February, according to data provided by S&P Global Market Intelligence. Driving up the real estate investment trust (REIT) was its strong fourth-quarter results and bullish outlook for 2024.
Project Matterhorn is paying dividends
Iron Mountain reported quarterly and full-year records for revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) last month. Revenue grew 7% for the year to nearly $5.5 billion, while adjusted EBITDA also rose 7% to almost $2 billion. The REIT focused on secure storage also delivered a 5% increase in its adjusted funds from operations (FFO) per share.
NYSE: IRM
Key Data Points
The company's Project Matterhorn initiative, which it launched in late 2022, is delivering the expected growth acceleration. The company's investments in data centers are helping boost growth. It leased 124 megawatts of data center capacity last year, which will help set the stage for more growth in 2024.
The REIT also released its 2024 guidance last month. "We are well positioned to continue our growth trajectory in 2024, which is reflected in our financial guidance for double-digit revenue growth," said CEO William Meaney in the fourth-quarter report. Iron Mountain expects revenue to climb 11% to more than $6 billion while adjusted EBITDA will increase by 12% to around $2.2 billion. Meanwhile, its adjusted FFO will rise by about 8% per share. The company expects Project Matterhorn to continue propelling its growth. Iron Mountain will also get a boost from its recently closed acquisition of Regency Technologies, which will enhance its asset lifecycle management capabilities.
Iron Mountain remains in an excellent position to continue growing briskly due to the robust demand for data center capacity. Cloud computing and other catalysts like AI are accelerating demand for data center capacity. That should enable Iron Mountain to continue growing its global data center platform at a healthy rate.
Is Iron Mountain a buy after last month's rally?
Iron Mountain trades at less than 17 times its 2024 FFO estimate after last month's rally. While it's not as cheap as it was, it's still one of the least expensive ways to invest in the data center megatrend. The company's relatively low value has it offering an attractive dividend (currently yielding 3.2%) that should continue rising (it gave investors a 5% raise last year). The company also has a strong balance sheet, with its 5.1 times leverage ratio near its lowest level in a decade. That gives it the flexibility to continue investing in Matterhorn initiatives that accelerate its growth, which should create more value for investors over the long term. These factors make Iron Mountain an attractive long-term investment opportunity these days.
