Iron Mountain Incorporated IRM is slated to release first-quarter 2025 results on May 1, before the opening bell. The quarterly results are likely to display year-over-year growth in revenues and adjusted funds from operations (AFFO) per share.

In the last reported quarter, this real estate investment trust (REIT) delivered a surprise of 3.33% in terms of AFFO per share. Results reflected solid performances in the storage and service segments and the data center business. However, higher interest expenses in the quarter undermined the performance to an extent.

Over the trailing four quarters, Iron Mountain’s AFFO per share surpassed the Zacks Consensus Estimate on all occasions, the average beat being 2.95%. The graph below depicts this surprising history:

Iron Mountain Incorporated Price and EPS SurpriseIron Mountain Incorporated Price and EPS Surprise

Iron Mountain Incorporated price-eps-surprise | Iron Mountain Incorporated Quote

Factors to Consider Ahead of IRM’s Q1 Results

In the first quarter, Iron Mountain’s earnings are likely to have been impacted by shifts in data storage through non-paper-based technologies, affecting physical storage volume and demand for handling of records.

The high cost of sales components and selling, general and administrative expenses due to the expansion of the company’s international business and high interest expenses have posed challenges.

However, strong demand for connectivity, interconnection and colocation space is likely to have spurred data center leasing activity. This growth might have bolstered the performance of Iron Mountain’s global data center segment during the period.

Projections for IRM

We estimate first-quarter interest expenses to rise 16.2% on a year-over-year basis.

For the first quarter, the company’s activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly AFFO per share has remained unchanged at $1.16 over the past three months. However, the figure implies significant growth from the year-ago quarter’s reported number.

The Zacks Consensus Estimate for storage rental revenues is pegged at $947.8 million, up from $884.8 million reported in the year-ago period. The consensus estimate for service revenues is pegged at $650.1 million, up from $592 million reported in the prior-year quarter. The consensus estimate for its global data center segment is pegged at $176 million, up from $143.94 million reported in the year-ago period.

The consensus estimate for quarterly total revenues is pegged at $1.60 billion, suggesting an increase of 8.27% from the prior-year quarter’s reported figure.

Story Continues

Here’s What Our Quantitative Model Predicts for IRM

Our proven model does not conclusively predict a surprise in terms of AFFO per share for Iron Mountain this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.

Iron Mountain has an Earnings ESP of -0.15% and currently carries a Zacks Rank #5 (Strong Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the broader REIT sector — Host Hotels & Resorts HST and Ventas VTR — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

Host Hotels & Resorts, scheduled to report quarterly numbers on April 30, has an Earnings ESP of +0.08% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ventas, slated to release quarterly numbers on April 30, has an Earnings ESP of +0.18% and a Zacks Rank of 2 at present. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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Host Hotels & Resorts, Inc. (HST):Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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