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    IRM · NYQ · Real Estate

    Iron Mountain Incorporated

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 3.00

    Market price

    USD 114.34

    Implied upside

    -97.4%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis model values the shares at 2.6% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.
    AdjustedCapital expenditure runs at 26.5% of revenue against depreciation of 14.9%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Current EV/EBITDA of 21.5x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 3.00-97.4%
    Exit multiple
    USD 125.98+10.2%
    Market price
    USD 114.34

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m188m376mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 7.6bnUSD 8.4bnUSD 9.3bnUSD 10.3bnUSD 11.4bn+10.6%
    EBITUSD 1.5bnUSD 1.7bnUSD 1.9bnUSD 2.1bnUSD 2.3bn+10.6%
    NOPATUSD 1.2bnUSD 1.3bnUSD 1.5bnUSD 1.6bnUSD 1.8bn+10.6%
    Add depreciation & amortisationUSD 1.1bnUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.7bn+10.6%
    Less capital expenditureUSD -2.0bnUSD -2.2bnUSD -2.5bnUSD -2.7bnUSD -3.0bn+10.6%
    Less increase in working capitalUSD -78.7mUSD -87.1mUSD -96.3mUSD -106.5mUSD -117.7m+10.6%
    Free cashflow to firmUSD 251.4mUSD 278.0mUSD 307.4mUSD 340.0mUSD 375.9m+10.6%
    Discount factor0.95950.88320.81310.74850.6890-
    Present valueUSD 241.2mUSD 245.5mUSD 250.0mUSD 254.5mUSD 259.0m+1.8%
    Present Value Of The ForecastUSD 1.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.137Reported 1.204, pulled toward 1.0 (Blume)
    Cost of equity11.25%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 34.0bn64.1% of capital
    Total debtUSD 19.1bn35.9% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.63%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 3.00

    94% of EV

    Forecast FCFF, final year
    USD 375.9m
    Capex at depreciation, working capital in reinvestment
    USD 2.3bn
    Less reinvestment at g/ROIC (29.0% of NOPAT)
    USD -656.2m
    Capitalised
    USD 1.6bn
    ROIC (WACC floor)
    8.6%
    Terminal value, undiscounted
    USD 26.9bn
    Terminal value, discounted
    USD 18.5bn
    Enterprise value
    USD 19.8bn
    Less net debt
    USD 18.9bn
    Equity value
    USD 894.3m

    Exit at 20.0x EBITDA

    Value per shareUSD 125.98

    98% of EV

    Terminal value, undiscounted
    USD 80.1bn
    Terminal value, discounted
    USD 55.2bn
    Enterprise value
    USD 56.4bn
    Less net debt
    USD 18.9bn
    Equity value
    USD 37.5bn

    Spread between methods: 191%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.63%30.3331.7933.5135.6138.24
    7.63%13.5413.8914.2514.6114.97
    8.63%2.402.703.003.313.61
    9.63%-6.33-6.07-5.81-5.55-5.29
    10.63%-13.33-13.11-12.88-12.65-12.43

    Outlined: this model. Green text: above today's price of 114.34. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year10.6%35.8%+25.3pp
    EBIT margin20.2%52.2%+32.0pp
    Discount rate8.6%4.9%-3.8pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.