Iron Mountain Inc.IRM , a leading provider of data protection and information management services, is set to release its second-quarter 2016 results on Aug 4. Last quarter, the company delivered a positive earnings surprise of 6.25%. The company has posted an average negative earnings surprise of 1.95% over the past four quarters.
Let's see how things are shaping up for this announcement.
Factors to Consider
Iron Mountain's diversified revenue base is a positive. It is noteworthy that more than 95% of the Fortune 1000 companies are on Iron Mountain's client list. In addition, its strong product portfolio, increasing market share, and promising international business are the primary growth catalysts. Moreover, the company's entry into the data center market is also likely to be a growth driver.
Furthermore, the company had recommenced merger and acquisition activities since the fourth-quarter 2015. In the second-quarter 2016, the company closed the acquisition of Recall Holdings.
However, the costs of integrations are expected to weigh on the financials, especially as it already has a highly leveraged balance sheet. The company also had to dispose certain assets in connection to Recall Holdings acquisitions. This included both tangible and intangible assets, in 13 cities across the U.S for nearly $80 million, subject to adjustments.
This apart, volatile currency environment and competition from the likes of Cintas Corporation CTAS and others remain overhangs.
IRON MOUNTAIN Price and EPS Surprise
Our proven model does not conclusively show that Iron Mountain is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below
Zacks ESP : Iron Mountain's Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 52 cents.
Zacks Rank : Iron Mountain's Zacks Rank #3 when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of stocks that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
GlycoMimetics Inc. GLYC with an Earnings ESP of +13.64% and Zacks Rank #1.
U.S. Silica Holdings, Inc. SLCA has an Earnings ESP of +8.70% and a Zacks Rank #2.
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