Iron Mountain scores 45 for management and 33 for moat. The management score rests on a return on invested capital of 5.3% and a gross margin of 25.7% — figures that describe returns closer to the cost of the capital behind them. Shareholder equity is negative, so the debt-to-equity figure is not meaningful here — usually the mark of heavy buybacks rather than distress, but worth checking. The narrow moat and mixed management are not the same judgement, and the gap between them is where the argument about this business sits.
Three independent anchors set the price worth paying. Growth is modelled at 10.7% a year, below the 11.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 21.4x. That produces an intrinsic value of $20.55, a 10-CAP price of $5.33 and a payback time price of $6.93, with the value zone set at the highest of the three, $10.28. Today's price of $111.18 is 982% above it.
The price is above the value zone and the business scores 33 for moat and 45 for management. Neither test argues for paying up here.
| Price | $111.18 |
| Market cap | $33.1B |
| P/E ratio | 79.4x |
| Return on invested capital | 5.3% |
| Gross margin | 25.7% |
| Debt to equity | -19.42x |
| Free cash flow yield | -3.8% |
| Growth rate used | 10.7% |
| Growth rate measured | 11.0% |
| Exit multiple assumed | 21.4x |
| Company | Moat | Buy price |
| SBA Communications (SBAC) | 45 | $111.78 |
| PotlatchDeltic Corp. (PCH) | 30 | $19.73 |
| Digital Realty (DLR) | 53 | $62.46 |
| American Tower Corp. (AMT) | 59 | $100.23 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Iron Mountain rather than accepting ours.