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Iron Mountain (IRM) valuation after fraud probe and Gotham City short report shifts sentiment on leverage and earnings

Simply Wall St · 1d ago

Iron Mountain (IRM) is suddenly under a legal and reputational spotlight after Gotham City Research accused the company of understating leverage, inflating adjusted EBITDA, and using sharply higher, ransom like fees with customers.

See our latest analysis for Iron Mountain.

The short term picture has clearly turned risk off, with a 30 day share price return of minus 16.45 percent and year to date share price return of minus 18.37 percent. However, the five year total shareholder return of 259.39 percent still points to strong long term compounding. Recent options market activity and the push into higher growth, AI driven data center revenue had been supporting a bullish narrative. The fraud allegations and legal probe have quickly shifted sentiment toward scrutiny of leverage, earnings quality, and pricing power at the current 85.5 dollar share price.

If the Gotham report has you reassessing where you take risk, this could be a good moment to explore fast growing stocks with high insider ownership as a way to uncover other compelling setups.

With the stock now trading at a steep discount to analyst targets, yet still boasting robust multi year returns, are investors being compensated for looking through the controversy, or is the market correctly pricing in weaker growth ahead?

Most Popular Narrative Narrative: 26.8% Undervalued

With Iron Mountain last closing at 85.5 dollar, the most followed narrative argues for a meaningfully higher fair value anchored in accelerating earnings power.

The company's strong pre-leased data center development pipeline in prime locations (Northern Virginia, Richmond, Amsterdam, etc.) and operational leverage are expected to yield accelerating revenue and margin gains as capacity comes online, with mid-to-high double-digit growth outlook supporting long-term earnings and cash flow.

Read the complete narrative.

Want to see what kind of revenue ramp, margin lift, and future profit multiple justify this steep upside case? The growth math may surprise you.

Result: Fair Value of $116.73 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained weakness in legacy physical storage volumes, or execution missteps scaling data centers, could quickly challenge the implied growth and valuation runway.

Find out about the key risks to this Iron Mountain narrative.

Build Your Own Iron Mountain Narrative

If you see the story differently or want to stress test the numbers yourself, you can build a custom view in minutes: Do it your way.

A great starting point for your Iron Mountain research is our analysis highlighting 4 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.