Iron Mountain Inc.IRM

Morningstar Rating

Stock Research and Analysis

by Mike Taggart, CFA

Iron Mountain is the global leader in document storage. Having consolidated the North American storage industry, the firm is now building its scale in Europe and Asia while also investing heavily in document shredding and digital storage. We believe Iron Mountain's business model affords it a wide economic moat, and its consistent returns make for a low fair value uncertainty rating. Read more

Bulls Say

Iron Mountain has the largest global reach of any records-management company and serves big, stable customers, including more than 95% of the Fortune 1000 and more than 90% of the FTSE 100.

Ironically, the proliferation of digital communication actually increases the demand for physical storage because regulations often require the creation of hard-copy records too.

Federal government rules allow agencies to outsource storage needs to private companies, which represents another market opportunity for Iron Mountain. Read more

Bears Say

Although the firm is expanding its digital archiving business, the scope of this business may be limited by competition from hardware/software storage giants IBM IBM, Hewlett-Packard HPQ, and EMC EMC.

Iron Mountain's business model features highly desirable recurring revenue. Thus, price increases are measured in order to avoid attracting more competitors to the business.

Returns on invested capital, including goodwill, do not cover the company's cost of capital. This situation will probably continue as the company must invest in more storage room to grow. Read more

Strategy

Iron Mountain's consolidation of the U.S. storage market concluded a few years ago. Management is now focused on expanding its digital services offerings and on increasing storage revenues in the Asia Pacific region. Read more

Management

Bob Brennan became CEO in June 2008, when Richard Reese stepped aside after 27 years. Reese remains chairman of the board and owns about 2.5% of shares. Brennan joined Iron Mountain when the company acquired Connected Corporation, where he was CEO. Whereas Reese oversaw Iron Mountain's significant growth, largely via successful acquisitions, Brennan is more of an operator who will improve operating efficiencies, make niche acquisitions, and expand the digital capabilities. Read more

Profile

Iron Mountain stores paper, film, and digital materials for 120,000 clients throughout the world. The bulk of Iron Mountain's revenue comes from physical storage--paper and film records--and ancillary services, such as retrieval, delivery, and shredding; storage of digital information accounts for the rest. Read more

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