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Last update on 2024-06-06

Iron Mountain (IRM) - Piotroski F-Score Analysis for Year 2023 (Final Score: 3/9)

Iron Mountain (IRM) Piotroski F-Score Analysis for 2023 with detailed insights on profitability, leverage, and asset turnover reflected in a score of 3/9.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 3

We're running Iron Mountain (IRM) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

Iron Mountain (IRM) has a Piotroski F-Score of 3, which suggests that its current financial health requires attention. While it has positive net income, strong cash flows, and operating cash flow higher than net income, other areas are concerning. Return on Assets have declined, leverage has increased, the current ratio has fallen, the number of shares has increased, gross margin has slightly declined, and asset turnover ratio has decreased. As such, IRM demonstrates poor operational efficiency and liquidity performance relative to the Piotroski scoring criteria.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score analysis, Iron Mountain (IRM) might not be the best choice for a conservative investor looking for strong, undervalued stocks. The score highlights that there are more areas of financial concern than strengths. It might be prudent to look for other stock options with higher scores, indicating better financial stability and growth potential.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Iron Mountain (IRM)

Company has a positive net income?

The net income criterion assesses whether Iron Mountain (IRM) has a net income greater than zero. Positive net income indicates profitability.

Historical Net Income of Iron Mountain (IRM)

Iron Mountain's net income for 2023 is $184,234,000, which is a positive figure. Considering this criterion, IRM scores 1 point because positive net income demonstrates profitability. Reviewing the past 20 years, IRM has shown generally positive net income, with the exception of a few years such as 2010 where it reported a net loss of $53,900,000. The sustained profitability in recent years, including the notable $556,981,000 in 2022, further complements this achievement.

Company has a positive cash flow?

The criterion evaluates whether the company's cash flow from operations (CFO) is positive, reflecting its ability to generate sufficient operational cash flow, which is crucial for sustaining and growing business.

Historical Operating Cash Flow of Iron Mountain (IRM)

For 2023, Iron Mountain (IRM) reported a cash flow from operations (CFO) of $1,113,567,000, which is positive. Over the last 20 years, there has been a consistent upward trend in CFO, growing from $160,909,000 in 2003 to the present value in 2023, albeit with some fluctuations. This consistent increase and the current positive CFO are encouraging indicators. This trend is indicative of sound operational health and effective business strategies. Therefore, IRM earns 1 point for this criterion, reflecting its strong operational performance.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures the change in profitability relative to assets. An increase suggests improved efficiency and profitability.

Historical change in Return on Assets (ROA) of Iron Mountain (IRM)

Comparing Iron Mountain's ROA for 2023 (0.011) with 2022 (0.0364), there is a noticeable decline. Therefore, no point is awarded for this criterion as the ROA did not increase. This trend is concerning, especially given that in the previous 20 years, their ROA ranged much higher than the current level. Additionally, the industry median ROA for 2023 was 0.4759, which indicates Iron Mountain is significantly underperforming compared to its peers. Iron Mountain needs to focus on improving its asset efficiency and profitability to align with industry standards.

Operating Cashflow are higher than Netincome?

This criterion evaluates whether a company's operating cash flow is higher than its net income, indicating efficient earnings generation.

Historical accruals of Iron Mountain (IRM)

In 2023, Iron Mountain's operating cash flow was $1,113,567,000, significantly higher than its net income of $184,234,000. This trend is favorable, adding 1 point to Iron Mountain's Piotroski score. Historically, Iron Mountain has shown strong operating cash flows compared to net income, evident from consistent positive cash flows over the last 20 years. Such a trend reflects the company's robust operational efficiency and suggests good earnings quality and solid cash management. Lower accruals also argue in favor of good quality earnings.

Liquidity of Iron Mountain (IRM)

Leverage is declining?

Leverage analysis investigates the company's debt levels in relation to its equity, indicating financial risk.

Historical leverage of Iron Mountain (IRM)

Iron Mountain (IRM) has seen an increase in leverage from 0.7999 in 2022 to 0.8227 in 2023. This indicates that the company's debt relative to its equity has grown, marking a higher financial risk. Over the last 20 years, leverage has consistently trended upwards, starting from 0.5072 in 2003, reaching 0.8227 in 2023. This increase suggests that the company has been increasingly relying on debt financing over the decades. Given the nature of Iron Mountain's business, which involves substantial physical assets, a moderate increase in leverage might be justifiable; however, a continuous upward trend raises concerns about its debt management strategy. Overall, the leverage score for 2023 would be set to 0 as the leverage has grown compared to 2022.

Current Ratio is growing?

The Change in Current Ratio measures a company's ability to pay short-term obligations. An increasing ratio is generally positive.

Historical Current Ratio of Iron Mountain (IRM)

For Iron Mountain (IRM), the Current Ratio in 2023 was 0.7761, compared to 0.8068 in 2022. This represents a decrease in the Current Ratio. This trend is generally viewed unfavorably, indicating a potential diminishing capacity to cover short-term liabilities. Therefore, for the Piotroski Analysis, this criterion scores a 0. Historical data shows that Iron Mountain's current ratio has oscillated over the past 20 years but generally remained below the industry median, which was 1.282 in 2023 compared to Iron Mountain's 0.7761. This suggests continual struggles relative to peers.

Number of shares not diluted?

The change in shares outstanding is crucial as it reflects the company's stock issuance or repurchase practices, which can affect shareholder value.

Historical outstanding shares of Iron Mountain (IRM)

In 2022, Iron Mountain (IRM) had 290,812,000 outstanding shares, which increased to 291,936,000 in 2023. This represents an increase in outstanding shares. Additionally, examining the trend over the last 20 years shows a general increase in outstanding shares from 195,115,500 in 2003 to 291,936,000 in 2023. This increment suggests that the company has likely engaged more in issuing shares than in repurchasing them. For this criterion, since the outstanding shares increased in 2023, no point is added (0 points). Increasing shares can be perceived as dilution for existing shareholders, which is generally unfavorable.

Operating of Iron Mountain (IRM)

Cross Margin is growing?

Gross Margin measures the percent of revenue that exceeds the company's direct cost of goods sold excluding administrative and marketing costs. It indicates how efficiently a company is producing and selling its goods.

Historical gross margin of Iron Mountain (IRM)

For Iron Mountain (IRM), the Gross Margin in 2023 is 0.5698, compared to 0.5711 in 2022. This indicates a slight decrease in Gross Margin, moving from 57.11% to 56.98%, which marks a -0.23% drop. This trend suggests a marginal decline in efficiency or increased direct costs relative to revenue. To offer a broader perspective, the Gross Margins over the past 20 years reveal Iron Mountain's Gross Margins have remained relatively stable, fluctuating within a narrow band around this level, and peaking at 0.599 in 2010. Comparatively, the industry median figures tend to show more dramatic shifts, indicating Iron Mountain's consistent operational performance albeit with a slight dip this year. Given the minimal change, this factor would not add a point under Piotroski's scoring system, resulting in a score of 0 for this criterion.

Asset Turnover Ratio is growing?

Asset Turnover measures a company’s efficiency in using its assets to generate sales. Higher ratios indicate better performance.

Historical asset turnover ratio of Iron Mountain (IRM)

Comparing the asset turnover ratios, Iron Mountain's (IRM) Asset Turnover has slightly decreased from 0.3337 in 2022 to 0.3261 in 2023. With a slight decline, it indicates that the company generated slightly lesser revenue per unit of assets in 2023 compared to 2022. Thus, the Piotroski score for this criterion should be 0. This trend reflects a consistent decline since 2008 when turnover was 0.4825, signifying potential concerns in asset usage efficiency.


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