Iron Mountain Inc. - Growth & Income

It's not often that you see a company raise its regular quarterly dividend more than 200%, but that's just what Iron Mountain Inc. (IRM) did earlier this month. The information management company raised its quarterly dividend from 6 cents per share to 18.5 cents. It currently yields 3.0%.

Iron Mountain also recently delivered its fourth consecutive positive EPS surprise. Over the last four quarters Iron Mountain has had an average upside surprise of 13.6%.

Third Quarter Results

The company reported third quarter earnings per share of 35 cents, beating the Zacks Consensus Estimate by 21%. It was a 39% increase over the same quarter in 2009.

Total revenue growth was a modest 2%. However, operational improvements led to the gross margin expanding from 58.0% of sales to 60.2%. This led to a 13% increase in adjusted operating income before depreciation and amortization.

Guidance Raised

Following the strong quarter, management raised its outlook for 2010. The company now expects EPS between $1.12 and $1.16.

Analysts have also been revising their estimates higher for both 2010 and 2011. The Zacks Consensus Estimate for 2010 is $1.15, within guidance, and up 18% over 2009 EPS. The 2012 estimate is $1.23, equating to 7% EPS growth.

Dividend Raised

On December 13, the company announced it was raising it was more than tripling its quarterly dividend, from 6 cents per share to 18.75 cents.

The stock yields an attractive 3.0%.

Reasonable Valuation

Iron Mountain trades at 21.7x forward earnings, a slight premium to the industry average of 20.2x. Its PEG ratio is a reasonable 1.5.

Its price to book ratio of 2.6 is in-line with its peers.

The Chart

The stock has had a good December, rising almost 13%. Shares are still well off their 52-week highs, however.

Iron Mountain Inc. is one of the world's largest record and information management services companies. It is headquartered in Boston, Massachusetts and has a market cap of $5.0 billion. IRM is a Zacks #2 Rank (Buy) stock.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

 
IRON MOUNTAIN (IRM): Free Stock Analysis Report
 
Zacks Investment Research