As security risks of all variations continue to rise, data management specialist Iron Mountain (NYSE:IRM) should make for an intriguing opportunity. Indeed, Wall Street analysts rate the enterprise a “Strong Buy,” and for good reason. Covering the entire value chain of data storage and protection – including the physical iteration – Iron Mountain stands well suited for the volatility of the new normal. I am bullish on IRM stock.
Historically, Iron Mountain made its name for the vital records of major institutions. A byproduct of World War II and the subsequent Cold War, the need for safeguarding critical documents took on substantial urgency. However, in the age of digitalization, IRM stock might appear anachronistic. Of course, appearances can be deceiving.
Recently, human interest journal Southern Living noted that demand for “analog” maps increased despite the prevalence of navigationally endowed devices. While the sales trend here is on a specific consumer quirk, the takeaway is as follows: you can always depend on paper maps, even when satellite networks fail. Many business owners that must constantly be on the road keep physical maps for that very reason.
Therefore, the historical business unit undergirding IRM stock isn’t as irrelevant as it may initially appear. With cybersecurity threats constantly on the rise, for the top blue-chip enterprises, paper backups make sense. While its digital counterparts may be infinitely more convenient, paper can never be hacked.
Aiding its bull case, on TipRanks, IRM stock has a ‘Perfect 10’ Smart Score rating. This indicates strong potential for the stock to outperform the broader market.
Although Iron Mountain distinguishes itself through its physical storage business, it doesn’t ignore shifting tides. For example, the company also provides relevancies for the digital ecosystem, particularly cloud data management and automation of workflows. However, what makes IRM stock compelling is that the underlying enterprise doesn’t just pivot from one paradigm to another. Instead, it seamlessly marries the analog and digital worlds.
Under its Cloud Data Management unit, Iron Mountain can replicate and store an enterprise-level client’s most critical digital files. Naturally, with the backup located in a different, secure facility, corporate victims of data breaches and other compromising incidents can get back on their feet relatively quickly, thereby mitigating consequences.
To be sure, several top enterprises forwarded solutions that keep nefarious netizens at bay. Unfortunately, new threats emerge daily, if not by the hour. Therefore, the concept of perfect cybersecurity represents a myth. Given enough time and resources, a bad actor can eventually compromise a digital network.
Even incompetence and gross oversight can leave hundreds of millions with their personal information stolen. Given the uncomfortably high probability that cybercriminals will breach even the most secure digital networks, IRM stock becomes surprisingly relevant.
Not only that, other factors that don’t involve criminality can negatively affect corporate data security. Most conspicuously, the impact that climate change may have on inclement weather could force companies in vulnerable areas to consider data backups, either the digital or analog variety (or both). Cynically, the above collective framework should keep IRM stock running.
As circumstances stand now, IRM stock benefits from decent financials that, over time, may improve significantly. Operationally, Iron Mountain’s three-year revenue growth rate stands at 5.6%, outpacing 74.6% of the competition. Also, its EBITDA growth rate during the same period pings at 8.7%, above 68.1% of the industry.
On the bottom line, the company is profitable. Over the trailing year, its net margin averages 10.9%. While generally a decent figure, Iron Mountain structures itself as a real estate investment trust (REIT). Compared to other REITs, the 10.9% margin actually ranks worse than 79.2% of its peers.
Still, Iron Mountain managed to roll through the COVID-19 crisis in 2020 with minimal damage to its top line. And in 2022, the company posted sales of $5.1 billion, up 13.6% against the prior year’s result. With more reasons for enterprises to protect themselves, these financial stats should continue improving, and that will likely benefit IRM stock.
Turning to Wall Street, IRM stock has a Strong Buy consensus rating based on four Buys, one Hold, and zero Sell ratings. The average IRM stock price target is $60.20, implying 14.1% upside potential.
When it comes to relevant sectors like cybersecurity, investors naturally focus on the frontline service providers. Though important, it’s also crucial to consider the damage mitigators. Invariably, with today’s heightened security risk profile, nothing in the digital realm is ever perfectly safe. Even the changing planet warrants a rethink in the physical data storage space. Thus, with so many challenges present, IRM stock makes logical sense.