Iron Mountain Incorporated (IBD – Free Report) is expected to release Q2 2022 results on August 4 before the bell. The company’s quarterly results are expected to show year-over-year growth in revenue and funds from operations (FFO) per share.
In the last reported quarter, this real estate investment trust (“REIT”) recorded a surprise of 30% in terms of adjusted FFO per share. The services and storage segments both posted strong performances during the quarter, while data center activity saw continued momentum.
Over the past four quarters, Iron Mountain’s FFO per share has exceeded the Zacks consensus estimate on every occasion, with the average beat of 17.48%. The graphic below illustrates this surprise story:
Let’s see how things went before this announcement.
Factors to note
Iron Mountain’s second quarter results are expected to reflect a steady stream of recurring revenue from its core storage and records management businesses. This, combined with the high box retention rate, should have stabilized storage rental revenue.
The consensus estimate for the same is set at $775.05 million for the second quarter, suggesting an improvement from $751.07 million in the prior quarter and $718.27 million in the period. of the previous year.
Additionally, IRM’s quarterly results are expected to show improved core services revenue. The consensus estimate for second-quarter services revenue is set at $525.19 million. It indicates growth from the previous quarter’s $496.98 million and also calls for an increase from the year-ago quarter’s $401.48 million.
Additionally, data growth, accelerating cloud adoption, and surging demand for IT outsourcing have boosted the demand for data center spaces. New technologies, such as 5G and augmented reality, have created opportunities for edge deployment and data center operators. Strong demand for connectivity, interconnect and colocation space is expected to have driven data center leasing activity for Iron Mountain.
For the second quarter, management has forecast total revenue of $1.3 billion, adjusted EBITDA of approximately $450 million and adjusted FFO of approximately $260 million.
Overall, total revenue for the second quarter is pegged at $1.3 billion, suggesting a year-over-year increase of almost 16%.
Iron Mountain’s second quarter business was not enough to win analysts’ confidence. The Zacks consensus estimate of 92 cents for quarterly FFO per share has not been revised over the past month. However, the figure suggests a year-on-year increase of 8.24%.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict an FFO beat for MRI this time. The right combination of two key ingredients – a positive earnings ESP and a Zacks rank #3 (Hold) or higher – increases the chances of an FFO beat. However, that is not the case here.
ESP Earnings: Iron Mountain has an ESP on earnings of 0.00%. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.
Zack’s Ranking: Iron Mountain currently carries a Zacks rank of 3. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
REIT Performance
Crown Castle International Corp. (ICC – Free Report) reported an adjusted FFO per share of $1.80 in Q2 2022. Zacks consensus estimate for the same was pegged at $1.79. Additionally, net revenue of $1.73 billion topped Zacks’ consensus estimate of $1.71 billion. Growth in venue rental revenue due to high demand for tower space helped Crown Castle International’s revenue.
American Tower Society (AMT – Free Report) reported consolidated adjusted FFO per share of $2.59 per share in the second quarter of 2022, which beat Zacks’ consensus estimate of $2.35. Net income improved 7% year-on-year. The results reflect improved revenue across its Real Estate segment. American Tower also had decent organic year-over-year tenant billing growth of 2.6% and total tenant billing growth of 7.8%.
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To note: Everything related to earnings presented in this article represents funds from operations (FFO) – a metric widely used to assess the performance of REITs.
