Iron Mountain IncorporatedIRMNYSE

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DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $107.81 per share(market-calibrated)

+0.0%

Upside to Fair Value

Current

$107.78

Pure Model

$106.58

Fair Value

$107.81

Bull Case

$152.16

Bear Case

$68.61

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

3.06%

Calibrated Growth

2.58%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $106.58.

What's Driving This Ratingfor IRM

↓

CapEx normalizing toward maintenance

Historical CapEx is 20.22% of revenue (heavy investment phase). Model fades this to 2.50% by Year 10, freeing up ~$1.9B in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 18.39% — below the sector mature average of 30.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $2.8B (26.19% margin).

⚠

Analyst growth decelerates sharply

Revenue growth drops from 12.14% in Year 1 to -0.34% by Year 5 (per analyst consensus). That's below the 2.50% terminal rate, so growth re-accelerates in Years 6-10 — a generous assumption. This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $89.45/share (23.2x terminal FCF) while exit multiple gives $123.72/share (29.8x terminal FCF). The 22x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 2.50% growth is more conservative. The base case averages both methods.

✓

Model and market roughly agree

Market-implied terminal growth of 3.06% is close to the model's 2.50% (only 56bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 73.85% indicates efficient cash generation. FCF reaches $3.0B by Year 10 (28.39% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.15

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.67%

Cost of Debt

Pre-tax Cost of Debt3.24%

Tax Rate27.91%

After-tax Cost of Debt2.34%

Equity Weight (E/V)62.56%

Debt Weight (D/V)37.44%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (62.56% × 9.67%) + (37.44% × 2.34%)

= 6.92%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$7.7B	$9.0B	$9.8B	$9.9B	$10.5B
EBIT	$1.4B	$1.7B	$1.8B	$2.2B	$2.8B
Tax	$397M	$464M	$505M	$626M	$770M
NOPAT	$1.0B	$1.2B	$1.3B	$1.6B	$2.0B
+ Depreciation	$948M	$1.1B	$1.2B	$1.2B	$1.3B
- Capex	$1.6B	$1.5B	$1.2B	$836M	$263M
- Δ NWC	$84M	$61M	-$3M	$8M	$26M
Free Cash Flow	$325M	$773M	$1.3B	$2.0B	$3.0B
Discount Factor	0.935	0.818	0.716	0.626	0.512
Present Value	$304M	$632M	$929M	$1.2B	$1.5B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$3.0B

Terminal Growth Rate2.50%

WACC6.92%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$69.3B

PV of Terminal Value$35.5B

Exit Multiple Method

Year 10 EBITDA$4.0B

Exit Multiple (EV/EBITDA)22.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$89.1B

PV of Terminal Value$45.6B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$9.8B

PV of Terminal Value$35.5B

Enterprise Value$45.3B

(-) Net Debt$18.9B

Equity Value$26.4B

Shares Outstanding295M

Price per Share$89.45

Exit Multiple Method

PV of Projected FCFs$9.8B

PV of Terminal Value$45.6B

Enterprise Value$55.4B

(-) Net Debt$18.9B

Equity Value$36.5B

Shares Outstanding295M

Price per Share$123.72

Pure Model Fair Value

$106.58

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
4.92%	$159.92	$176.35	$199.57	$226.20	$214.03
5.92%	$121.63	$130.32	$141.56	$156.65	$177.96
6.92%	$95.02	$100.21	$106.58	$114.57	$124.90
7.92%	$74.97	$78.32	$82.29	$87.06	$92.92
8.92%	$59.05	$61.33	$63.97	$67.06	$70.71

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$68.61

-36.3% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.43

Base Case

$106.58

-1.1% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.15

Bull Case

$152.16

41.2% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.98

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Real Estate Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth12.14%

Year 3 Revenue Growth7.19%

Year 5 Revenue Growth-0.34%

Year 7 Revenue Growth0.79%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin18.39%

Terminal EBIT Margin30.00%

Tax Rate27.91%

Historical Capex / Rev20.22%

Terminal Capex / Rev2.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 22x EV/EBITDA (Real Estate sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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