IRM — Iron Mountain Incorporated

As of 2026-08-27, the market is clearly bullish after Q2 2026 revenue of $2.03B (+18.5% YoY) beat consensus, AFFO rose 17% to $1.44/share, and management lifted FY26 revenue guidance to $7.94B–$8.01B. Analysts responded with multiple price-target hikes, including Truist to $155 and Goldman Sachs to $153, and the consensus rating is Buy, although 5 of 20 ratings are Sell.

Revenue growth is accelerating: Q2 2026 revenue of $2.03B was up 18.5% YoY versus roughly 11.6% YoY growth in Q2 2025, and Q1 2026 grew 21.6% YoY. Operating income jumped 43.7% YoY in Q2 2026, operating margin expanded to about 18.4% from 15.2% a year earlier, and net income swung from -$44.9M to +$101.4M. The big negative is free cash flow, which has been negative in eight of the last nine quarters because data center capex is running well above operating cash flow — that is an investment-phase trend, not a demand problem.

The trailing GAAP P/E of 87.6x is misleading for a REIT in a heavy capex cycle. Using the company's FY26 adjusted EPS/AFFO guidance midpoint of $5.90, the stock trades at roughly 20.8x forward adjusted earnings — reasonable for 17% AFFO growth and a data center business growing ~39% YoY. It is not cheap, though: the 4.83x price-to-sales is above the 5-year average of 3.70x, and the stock sits about 13% below the $142 consensus target.

Investors are clearly paying for adjusted operating earnings and AFFO, not reported GAAP EPS. At about 21x FY26 adjusted EPS guidance, the market is pricing in continued mid-teens AFFO growth and successful data center leasing rather than a distressed valuation. If IRM hits guidance and keeps 2027 revenue growth near 13%, the multiple can hold; any data center leasing hiccup or financing-cost spike would likely compress it.

As of 2026-08-27, RSI was 47.75, price was $122.69, -0.91% below its 20-day SMA and -1.24% below its 50-day SMA but +12.59% above its 200-day SMA. That is a neutral, consolidating posture within a longer-term uptrend after a run from the 52-week low of $77.77. It is neither overbought nor oversold, so momentum alone does not argue for immediate entry; watch for a reclaim of the 20/50-day averages to confirm the next leg.

• Interest rates: IRM carries $17.1B of long-term debt and negative stockholders' equity, so higher-for-longer rates raise refinancing costs and cap REIT multiple expansion.
• AI infrastructure demand: tight data center supply and low vacancy in primary markets are supporting leasing velocity and pricing.
• Digital transformation of records: legacy physical storage remains a stable cash cow, while digital services and ALM provide higher-growth revenue.
• Capital markets and REIT sector rotation: valuations remain sensitive to the spread between dividend yields and Treasury yields.
• Inflation: storage pricing power and long-term contracts give some inflation protection, but cost inflation pressures capex and operating costs.

• Q3 2026 earnings, expected late October/early November 2026, to confirm that data center leasing momentum and the raised FY26 guidance remain on track.
• New data center leasing announcements, especially further pre-leasing of the 160.2 MW construction pipeline that is already 71.2% pre-leased.
• Potential Federal Reserve rate cuts, which would lower interest expense and improve the relative attractiveness of the 2.67% dividend yield.
• Q3 2026 dividend of $0.864/share payable October 2, 2026.

• High leverage and negative stockholders' equity: debt-to-equity is mathematically distorted, and any meaningful EBITDA miss or rate spike would pressure AFFO and the balance sheet.
• Persistent negative free cash flow: capex exceeded operating cash flow in nearly every recent quarter, creating ongoing external funding needs and possible equity dilution.
• Data center cyclicality and competition: AI-driven demand could slow, lease commencements could slip, and the pre-leased pipeline may not convert as expected.
• Accelerating decline in the legacy records business could outpace growth from digital services, ALM, and data centers.
• GAAP earnings volatility and one-off charges, such as the Q2 2025 net loss, complicate reported earnings quality.

Iron Mountain is executing a credible pivot from paper storage to data centers and digital services, with record revenue, raised guidance, and strong leasing momentum. The stock is not a deep-value bargain, but at roughly 21x FY26 adjusted earnings with the legacy storage business funding high-return growth, it is a reasonable long-term growth-and-income investment for someone comfortable with a leveraged balance sheet.

I applied a 19.75x EV/EBITDA multiple to estimated FY26 adjusted EBITDA of about $2.87B (from the $7.975B revenue guidance midpoint and roughly 36% EBITDA margin), subtracted net debt of about $16.9B, and divided by roughly 297.5M shares. That yields about $133.70, a modest premium to the $122.69 price but below the $142 consensus target.