Distracting agenda
Wrap
MARKET SNAPSHOT AS OF 0430 GMT 4 Aug :
S&P 500 Index Mini Futures: 4,153.00; down 0.08%; 3.25 points
DJIA Mini Futures: 32,764.00; down 0.02%; 6 points
Nikkei: 27,902.26; up 0.58%; 160.36 points
MSCI Asia, Ex-JP: 520.81; up 0.51%; 2.63 points
EUR/USD: $1.0164; down 0.01%; 0.0001 point
GBP/USD: $1.2155; up 0.08%; 0.0010 point
USD/JPY: 133.70 yen; down 0.13%; 0.18 point
Spot Gold: $1,770.96; up 0.34%; $6.06
U.S. Crude: $90.89; up 0.25%; $0.23
Brent Crude: $96.91; up 0.13%; $0.13
10-Yr U.S. Treasury Yield: 2.7155%; down 0.031 point
10-Yr Bund Yield: 0.8675%; up 0.006 point
Basically, not much happened.
Iron Mountain Inc
Bear case:
- heavily geared (debt:equity is fifteen times),
- negative earnings growth (-7% YoY),
- bad economics (the company keeps archive boxes of paper for companies that need space),
- poor return on assets (3.94%),
- $2mmm of current liabilities to finance (OK, some trade creditors, but still),
- vulnerable to multiple compression (P/E ~30 ) aka rotation,
- balance sheet assets may collapse if rates keep rising (presumably they are warehouses in marginal locations).
Bull case:
- high dividend yield (~5%),
- very steady historical revenue,
- seems to be well managed, with a fairly demanding schedule of debt repayment historically,
- cost of interest seems modest ($425 mm pa on $13.5 mmm of total liabilities).
I can see why people like this stock, and I understand that it’s doing some work to extend its market leading paper archiving into the digital world, but a company with expertise in collecting boxes of papers and storing them in warehouses is not likely to be that good at creating world-beating software (just to show my biases).
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— purr.in.ink (@purrinink) August 2, 2022
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