Despite having 4.8x net lease-adjusted leverage and negative free cash flow, Iron Mountain raised its 2026 AFFO guidance. This is based on new 110-megawatt data center contracts. The issue is the price. The current price of $117.40 represents 19.9x based on 2026 AFFO, with a 12-month baseline target of $121 (approx. 166,980 KRW) and a Hold rating.
The Korean Won in the text was converted at 1,380 Won per dollar based on the closing price on August 28, and financial data was used based on information disclosed up to August 31.
- What kind of company is Iron Mountain (IRM)?
- Six Words You Need Before Reading REIT
- Iron Mountain (IRM) Q2 Earnings: Basis for Raising Guidance
- Iron Mountain (IRM) Valuation: Is 19.9x AFFO Expensive?
- Iron Mountain (IRM) vs. Competitor Comparison: DLR, EQIX, and PSA
- Iron Mountain (IRM) Target Price Scenarios and Growth Assumptions
- Iron Mountain (IRM) Risk and Bear Trigger
- Andy's perspective
- Investment Conclusion: Iron Mountain (IRM) is a Hold Now
- Frequently Asked Questions
What kind of company is Iron Mountain (IRM)?
Iron Mountain is a special purpose REIT established in 1951 and headquartered in Portsmouth, New Hampshire. It stores paper documents and data on behalf of over 240,000 client companies in 61 countries. Its clients include approximately 951 TP3T of Fortune 1,000 companies.
The business is broadly divided into two parts. One is the traditional Records Management (RIM) business, which involves stacking boxes in a warehouse and collecting monthly storage fees. Although growth is slow, the cancellation rate is extremely low, so cash flows in like a pension. In the second quarter of 2026, storage fee revenue was $1.135 billion, an increase of 12.31 TP3T from the previous year.
Another factor driving the recent stock price is the data center, digital transformation solutions, and Asset Lifecycle Management (ALM) business, which involves recovering and reselling corporate waste IT assets. The company refers to these three as its growth businesses, which grew by over 501 TP3T year-over-year in the second quarter, accounting for 351 TP3T of total revenue.
In other words, Iron Mountain is not a pure data center company. Approximately 651 TP3T of its revenue still comes from document storage. This ratio is key to valuation judgments, so it is important to keep this in mind.
Six Words You Need Before Reading REIT
REITs use a different accounting language than general manufacturing. If you know just these six things, you can read the numbers below.
- REIT (Real Estate Investment Trust) It is a structure that receives corporate tax exemptions in exchange for distributing the majority of profits generated from real estate as dividends. Therefore, REITs do not accumulate profits internally but instead raise growth funds through debt or capital increases.
- AFFO (Adjusted Operating Funds) — In the REITs market, this is the actual cash generated. It is calculated by adding depreciation to net income and subtracting capital expenditures of a maintenance nature. For companies like Iron Mountain, where quarterly depreciation reaches $289 million, accounting net income significantly distorts actual cash generation, so the Price-to-AFFO multiple is looked at instead of the P/E ratio.
- Net Lease Adjustment Leverage — This is a debt-to-equity ratio specific to REITs, calculated by dividing net debt by adjusted EBITDA while treating leased properties as debt. It stood at 4.8 times at the end of the second quarter, within the company's target range (4.5 to 5.5 times).
- ALM (Asset Lifecycle Management) — It is a business that collects used servers and laptops from companies, destroys the data, and resells the parts. Performance is linked to the used prices of memory and CPUs.
- Cap Rate — The value obtained by dividing the annual net operating income of real estate by the asset price. A lower value indicates that it is traded at a higher price. Iron Mountain's current enterprise value corresponds to a cap rate of 5.371 TP3T relative to 2026 adjusted EBITDA.
- MW (Megawatt) contract — Data centers are leased by power capacity, not by area. New contract MW represents future revenue reservations.
Iron Mountain (IRM) Q2 Earnings: Basis for Raising Guidance
The Q2 2026 earnings announced on August 5 marked all-time quarterly highs. Revenue was $2.029 billion (approx. 2.8 trillion won), an increase of 18.51 TP3T year-over-year, and organic growth excluding exchange rate effects was 16.81 TP3T. Adjusted EBITDA was $727 million (approx. 1.033 trillion won, +15.71 TP3T), and AFFO was $433 million at $1.44 per share (approx. 1,987 won, +16.11 TP3T). Net income was $106 million, turning a profit from a loss of $43.3 million a year earlier.
Looking at revenue for the previous four quarters in sequence, it reached $1.712 billion, $1.754 billion, $1.843 billion, $1.936 billion, and $2.029 billion, marking five consecutive quarters of growth. This means the growth was not just a one-quarter flash. However, the adjusted EBITDA margin fell 90 basis points year-over-year to 35.81 TP3T. This is the result of a diluted mix, as lower-margin service and ALM revenue (+27.41 TP3T) grew twice as fast as higher-margin storage revenue (+12.31 TP3T). It can be seen as the price of growth.
The most notable figure is data center contracts. While new contracts in the second quarter amounted to only 13 megawatts, 75 megawatts were signed in July alone, bringing the cumulative total since the beginning of the year to 110 megawatts. As of the end of June, the backlog holds an additional $370 million (approximately 510.6 billion won) in revenue scheduled for 2026 and beyond. The company plans to bring approximately 325 megawatts to power supply within the next 24 months and projects a final developable capacity of about 1.4 gigawatts.
Based on this performance, the company Raised 2026 annual guidance...did. Revenue is $7.94 billion to $8.01 billion (median approx. 11 trillion won, +161 TP3T), adjusted EBITDA is $2.94 billion to $2.97 billion, AFFO is $1.76 billion to $1.78 billion, and AFFO per share is $5.87 to $5.93. This is an upward revision from the previous guidance of $5.79 to $5.86, representing a year-over-year growth of approximately 141 TP3T based on the median. The guidance for the third quarter is revenue of approximately $1.98 billion and AFFO per share of approximately $1.47. The detailed figures are 8-K earnings data filed with the SECYou can check it at.
Iron Mountain (IRM) Valuation: Is 19.9x AFFO Expensive?
According to Yahoo Finance, Iron Mountain's trailing P/E ratio is 83x, and its forward P/E ratio is 43x. These figures can be ignored, as depreciation of $289 million per quarter weighs down accounting net income. REITs should be viewed based on the Price-to-AFFO multiple.
If you divide the current price of $117.40 by the 2026 median AFFO guidance of $5.90 (approximately 8,142 won), 19.9 timesC. To determine if this multiple is expensive, two baselines are needed: the company's own historical multiple and the industry multiple.
| year | AFFO per share | Annual average stock price (approx.) | Stock Price/AFFO |
|---|---|---|---|
| 2021 | $3.48 | About $43 | 12.4 times |
| 2022 | $3.83 | About 50 dollars | 13.1 times |
| 2023 | $3.98 | About $58 | 14.6 times |
| 2024 | $4.54 | About $97 | 21.4 times |
| 2025 | $5.17 | About $93 | 18.0 times |
| 2026E | $5.90 | $117.40 (current) | 19.9 times |
The 5-year average is 15.9 times, and the recent 3-year average is 18.0 times. The current 19.9 times is approximately 111 TP3T higher than the 3-year average. However, this premium cannot be unconditionally viewed as an overvaluation. From 2021 to 2023, Iron Mountain was a company whose AFFO increased by 8 to 101 TP3T annually; now, it is increasing by 14 to 171 TP3T, and the proportion of growth businesses has risen to 351 TP3T. It is normal for the multiple to rise when the growth rate accelerates.
So, the appropriate drainage 19.0 timesIt was set at this level. It is a value calculated by adding the improvement in the business mix to the company's own 3-year average of 18x, but without reaching the level of a pure data center REIT. The current 19.9x is compared to this standard. +4.7% PremiumAs such, rather than being overvalued, it is a range that has already reached a fair price.
Cross-validation of DCF and Net Asset Value
First, there is one point to address. Iron Mountain's free cash flow over the past 12 months is minus $597 million (approx. -823.9 billion won)c. It is the value obtained by subtracting capital expenditures of $2.252 billion from operating cash flow of $1.655 billion. During the same period, $997 million (approximately 1.3759 trillion won) was paid out in dividends. This can be alarming as it implies that dividends are being financed through debt.
However, of the $2.2 billion in capital expenditures, maintenance-related expenditures amount to approximately $38 million per quarter, or just over $150 million annually. The remaining $2 billion or more is a development investment for building new data centers. Development capital expenditures do not burn cash but are converted into income-generating assets. Therefore, applying a standard DCF (Discounted Cash Flow) would result in a distortion where the company's value appears negative. Instead, the cash flow to shareholders—calculated by subtracting only the equity portion not financed by debt from AFFO—was discounted using the cost of equity.
| home | Weakness | basic | stress |
|---|---|---|---|
| Cost of equity | 10.5% | 9.7% | 9.2% |
| End-of-life growth rate | 2.25% | 2.75% | 3.0% |
| AFFO growth (1~3 years) | 8% | 11% | 14% |
| forecast period | 10 years + permanent growth | 10 years + permanent growth | 10 years + permanent growth |
| Fair value | $82.87 | $123.04 | $160.61 |
The third verification is the cap rate. Applying a data center and logistics mixed cap rate of 6.01 TP3T to the estimated 2027 adjusted EBITDA of approximately $3.35 billion results in an enterprise value of $55.8 billion; subtracting the net debt of $19.7 billion yields a share price of $120.36. If the cap rate is conservatively set at 6.51 TP3T, the figure is $106, and if lowered to 5.751 TP3T, it is $128.
The multiplier method at $120.5, the DCF at $123.0, and the cap rate at $120.4. These three different methods meet around the $120 mark. This level of convergence is uncommon, which means the signal that this range represents a fair price is very strong.
Iron Mountain (IRM) vs. Competitor Comparison: DLR, EQIX, and PSA
Iron Mountain is a company with no direct direct comparisons. This is because it encompasses both a data center REIT and a warehouse REIT. Therefore, we have examined both extremes. The EV/EBITDA figures below are all sourced based on trailing 12-month periods.
| event | Market capitalization | EV/EBITDA | Sales growth | Dividend yield | personality |
|---|---|---|---|---|---|
| Iron Mountain (IRM) | $34.9 billion | 21.6 times | +18.5% | 2.94% | Storage 65% + Data Center 35% |
| Digital Realty (DLR) | $70 billion | 27.9 times | +29.9% | 2.54% | Pure data center |
| Equinix (EQIX) | $103.1 billion | 27.6 times | +16.7% | 1.98% | Pure data center and interconnection |
| Public Storage (PSA) | $58.5 billion | 20.2 times | +3.3% | 3.83% | Pure self-storage |
The table is clear. Iron Mountain’s 21.6x is significantly cheaper than data center REITs (27–28x) and slightly more expensive than self-storage REITs (20.2x). Its current position aligns perfectly with the business composition ratio. The premium is justified considering that its revenue growth rate of 18.51 TP3T far surpasses that of public storage at 3.31 TP3T.
In other words, for Iron Mountain to be revalued at 27x, the data center share must become a majority, rather than the current 35%. Given the 1.4 Gigawatt development plan, this is not an impossible scenario, but it is not something that will happen within 12 months. For reference. Analysis of Applied Digital (APLD)'s Data Center Leasing ModelIna Core Scientific (CORZ) Collocation Switching CaseIf we look at them together, we can compare how different the multiples are in the market between pure rental business operators and mixed-type business operators.
Iron Mountain (IRM) Target Price Scenarios and Growth Assumptions
We determined the growth rate first. The 5-year compound annual growth rate of AFFO per share from $3.48 in 2021 to an estimated $5.90 in 2026 is 11.11 TP3T. The market consensus growth rate for 2027 is approximately 121 TP3T, and the data center REIT industry average is approximately 101 TP3T. If we weight these three in a 4:4:2 ratio... 11.2%...is produced. Applying this, the estimated AFFO per share for 2027 is $6.56, and for the next 12 months, it is $6.34.
| scenario | Applied Drainage | Target price | Won | Compared to the current price | weight |
|---|---|---|---|---|---|
| stress | 22.0 times | $144 | Approximately 198,720 won | +22.7% | 27% |
| basic | 19.0 times | $121 | Approximately 166,980 won | +3.1% | 50% |
| Weakness | 15.5 times | $96 | Approximately 132,480 won | -18.2% | 23% |
$121 for the baseIt is the value obtained by multiplying the future 12-month AFFO per share of $6.34 by an appropriate multiple of 19 times. Bullish at $144This is a case where the proportion of data centers is rapidly increasing due to a series of large orders, such as the 75-megawatt contract in July, and the market recognizes multiples of up to 22 times. Weak at $96This is a case where interest rates rise, pushing the overall multiples of REITs down to 15.5 times and AFFO growth slows to single digits.
The reason for setting the weights at 501 TP3T for base, 271 TP3T for bullish, and 231 TP3T for bearish is as follows. Since the upward guidance and record-high quarterly earnings are clear upside signals, the bullish rating was raised slightly above 251 TP3T. On the other hand, negative free cash flow and 4.8x leverage are factors that rapidly cut the multiple when interest rate conditions worsen, so the bearish rating was not lowered below 221 TP3T.
The weighted expected value is $121.46. Expected return +3.51 TP3TC. Adding the dividend yield of 2.941 TP3T results in a total expected return of approximately +6.41 TP3T. For reference, the Wall Street consensus target price averages $146.10 (approximately 201,618 KRW), and the investment opinion based on 10 analysts is Buy (1.73). In August, Wells Fargo also raised its target price from $135 to $140.
The reason for reaching a conclusion different from the consensus is simple. $146.10 represents 24.8 times AFFO in 2026 and 22.3 times in 2027. This is a multiple that Iron Mountain has not maintained in any of the past five years. While acknowledging the revaluation due to the increased proportion of growth businesses, applying the multiple of a pure data center company to a company where 651 TP3T of revenue is still in storage is a separate assumption.
Iron Mountain (IRM) Risk and Bear Trigger
| Risk | Influence mechanism | Monitoring Indicators |
|---|---|---|
| interest rate rise | Due to the nature of dividend stocks, rising government bond yields reduce their relative attractiveness, directly suppressing their multiples. | Whether the U.S. 10-year Treasury yield will recover to the 50-day moving average (currently $124.08). |
| reliance on debt financing | New borrowing is required every year because operating cash flow cannot cover dividends and development investments. | Net lease-adjusted leverage (current 4.8x, upper limit 5.5x), quarterly capital expenditures versus operating cash flow |
| Data center order volatility | Since the contracts are large-scale, quarterly fluctuations are extreme (13MW in Q2, 75MW in July) | 12-month cumulative contract MW, backlog amount (current $370 million) |
| ALM Price Sensitivity | If used memory and CPU prices fall, both revenue and margins drop simultaneously. | ALM segment revenue growth rate, service revenue margin |
| Decrease in core business volume | If the number of storage boxes decreases due to the transition to paperless, pension-type cash dries up. | Organic growth rate of storage fees (current +11.5%), contribution to price increase versus contribution to volume |
Five Conditions to Turn This Stock to Sell
- When the U.S. 10-year Treasury yield crosses 5% again and multiples across the REIT sector are reset
- When net lease-adjusted leverage breaks through 5.5x and a capital increase becomes a realistic option
- When there are two consecutive quarters with data center quarterly contracts of less than 10MW and no recovery like in July
- When ALM sales turn to a year-over-year decline due to the normalization of used parts market prices
- When the organic growth rate of storage fees falls below 5% and the pension nature of the core business is shaken
The 4.311 TP3T drop in stock prices in a single day on August 28 must also be viewed in this context. On the same day, Digital Realty fell 3.451 TP3T and Equinix 2.981 TP3T, while pure service providers like Applied Digital and Irene plummeted between 7 and 131 TP3T. This was not due to specific negative news regarding Iron Mountain, but rather risk aversion across the entire capital-intensive data center sector. This synchronization is Stocks that finance growth through debt, like Coreweave (CRWV)It has been repeatedly observed in.
One more point to note regarding the financial structure is that equity is negative $955 million. Total debt stands at $19.95 billion (approximately 27.5 trillion won), and cash amounts to only $200 million. While these figures may appear risky on their own, for a company that has distributed most of its profits as dividends as a REIT for decades, this is more akin to an accounting residue. The actual indicator, net lease-adjusted leverage of 4.8x, is within the target range, and the dividend payout ratio relative to AFFO is also well within the margin at 58.61 TP3T.
Andy's perspective
I was honestly disappointed when new data center contracts in the second quarter hit 13 megawatts. However, 75 megawatts came in in July alone. This means you shouldn't interpret this business based on quarterly trend lines. A single large contract can completely change the quarterly figures. That is why I view Iron Mountain's data centers solely through 12-month cumulative megawatts, rather than quarterly graphs. Since this is a period where buyers and sellers repeatedly buy and sell in surprise at quarterly results, I personally believe that this volatility actually creates entry opportunities.
However, what holds me back is the gap in the target price. The $25 difference between the Wall Street average of $146 and my calculated $121 is not due to differing earnings forecasts. The growth rate assumptions are nearly identical. It is solely a difference in the multiple assigned. I still view this company as a document storage firm with a data center business attached, whereas the market views it as a data center firm with a remaining document storage business. Which perspective is correct will be determined when the data center weighting exceeds 501 TP3T, and until then, I have determined that it is a rational approach to wait while receiving a dividend of 2.91 TP3T.
Investment Conclusion: Iron Mountain (IRM) is a Hold Now
Investment opinion Hold, certainty middle, 12-month baseline target price $121 (approx. 166,980 won)all.
The signals that led to this conclusion are as follows: Valuation was nearly neutral at +4.71 TP3T relative to the fair multiple of 19x, and the expected return of +3.51 TP3T (+6.41 TP3T including dividends) fell short of the buy threshold of +121 TP3T. The key point is that while fundamentals are clearly improving, this improvement has already been reflected in the stock price. A good company and a good price are two different things.
Situational Checklist
- If you already own one — There is no reason to sell. With a dividend payout ratio of 58.61 TP3T relative to AFFO, the dividend is safe, and the data center backlog has reserved revenue for 2027. It is sufficient to keep the five bearish triggers mentioned above on the checklist.
- If you are considering a new entry — Now is not the time to buy the entire position. If it corrects to $105 (AFFO 17.8x), the expected return will rise to double digits. A staggered approach is reasonable.
- If the goal is dividends — 2.941 TP3T is lower than the 5-year average of 3.811 TP3T. The dividend itself is not in an attractive range, and the price level where the dividend yield exceeds 3.31 TP3T (approximately $105) was historically the entry line.
- Next verification point — Q3 earnings on November 4. The two things to look at are not EPS, but Q3 data center contract MW and net lease-adjusted leverage.
For your reference Stocks like Amphenol (APH) that have already proven their performance in AI data center infrastructureCompared to that, it is also worth considering that Iron Mountain is a stock that relies more on asset revaluation logic than on earnings.
Frequently Asked Questions
What is the 12-month target price for Iron Mountain (IRM)?
The base scenario is $121 (approximately 166,980 KRW). This figure is calculated by applying a fair multiple of 19x to the projected 12-month AFFO per share of $6.34, representing +3.11 TP3T relative to the current price of $117.40. The bullish scenario is $144, and the bearish scenario is $96; the weighted expected return is +3.51 TP3T, or +6.41 TP3T including dividends. The average Wall Street consensus is $146.10, which is higher than this figure.
Why is it not considered overvalued when the P/E ratio is 83 times?
This is because the P/E ratio is not suitable for REITs. Iron Mountain recognizes $289 million in depreciation every quarter, which is not an actual cash outflow but an accounting treatment that reduces the book value of already built warehouses and data centers. As a result, accounting net income appears much smaller than actual cash generation capacity. REITs should be evaluated based on the AFFO multiple, which stands at 19.9 times.
Is the dividend safe even if the free cash flow is negative?
It is relatively safe for now. The cause of the negative $597 million in free cash flow over the past 12 months is development investment of over $2 billion spent on new data center construction, while maintenance capital expenditures amount to only $150 million per year. The payout ratio relative to AFFO, which indicates the actual capacity to pay dividends, is 58.61 TP3T. However, since development investment is financed by debt, it is necessary to continue monitoring whether net lease-adjusted leverage approaches the upper limit of 5.5 times.
Should Iron Mountain be treated the same as data center REITs like DLR and EQIX?
Not yet. Growth businesses combining data centers, digital services, and ALM account for 351 TP3T of total revenue, while the remaining 651 TP3T is still archiving. In fact, the EV/EBITDA ratio is clearly discounted, with Iron Mountain at 21.6x compared to Digital Realty and Equinix at 27.9x. A revaluation argument would hold if 1.4 gigawatts of developable capacity were realized and the data center share exceeded the majority, but this is not expected to happen within the next 12 months.
Why did the stock price drop by 4.31 TP3T on August 28, 2026?
It was risk aversion across the entire sector, rather than individual negative news. On the same day, Digital Realty fell 3.451 TP3T and Equinix 2.981 TP3T, while pure data center operators such as Applied Digital and Irene plummeted between 7 and 131 TP3T. It was a day of sell-off across capital-intensive and debt-heavy data center stocks. Due to the decline, Iron Mountain fell 12.81 TP3T below its June high of $134.68.
Reference materials
- Iron Mountain Q2 2026 Earnings Announcement (SEC Form 8-K)
- Iron Mountain Official Press Releases and Annual Guidance
- Iron Mountain Q2 2026 Supplementary Financial Information (SEC)
- Full Transcript of Q2 2026 Earnings Conference Call
※ This analysis is based on publicly available financial data and market data. AI research tools were utilized during the compilation process, and the author personally reviewed the figures and logic prior to publication. This article is intended for informational purposes only and is not a recommendation to trade any specific stock. Stock prices, exchange rates, and estimates are based on the time of writing and are subject to change; the investor bears sole responsibility for their final investment decisions and the resulting consequences.