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5 Reasons to Add OUTFRONT Media (OUT) to Your Portfolio Now
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The relaxation of pandemic-related restrictions is aiding the rebound in the advertising environment and OUTFRONT Media (OUT - Free Report) is poised to gain from this recovery, backed by a solid presence in key markets.
Moreover, this Zacks Rank #1 (Strong Buy) stock has been witnessing an upward trend in funds from operations (FFO) per share estimate revisions for the current year, indicating a favorable outlook for the company. Particularly, the Zacks Consensus Estimate for 2022 FFO per share has been revised a whopping 51.4% upward in two months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Though shares of OUTFRONT Media have declined 9.2% in the past month against its industry's 4.6% growth, given its progress on fundamentals and positive estimate revisions, the stock is likely to keep performing well in the quarters ahead and hence the dip offers a good entry point.
Image Source: Zacks Investment Research
Let’s now delve deeper into its strengths.
Reasons to Buy OUTFRONT Media
Portfolio Diversity: OUT’s advertising sites are geographically diversified, with a solid presence in key markets in the United States and Canada. This geographic diversity enables its clients to reach a national audience and provides the flexibility to tailor campaigns to specific regions or markets. This out-of-home (“OOH”) advertising company not only provides communication and advertising services for several transit authorities but also offers services to various industries, including professional services, healthcare/pharmaceuticals and retail. Hence, its diversity, both industry-wise and geographical, makes the company’s revenues less volatile in nature.
Revenue Strength: Amid the rebound in the advertising environment, OUTFRONT Media is well-poised to make steady progress in improving its top line. Revenues are expected to witness year-over-year growth of 21.9% and 10.7% in 2022 and 2023, respectively, to $1.78 billion and $1.98 billion.
Focus on Digital Billboards: OUTFRONT Media has been making strategic investments in its digital-billboard portfolio over the years. In the first quarter, the company built or converted 22 new digital billboard displays in the United States. Its total digital-billboard displays reached 1,665 at the end of the first quarter of 2022, up from 1,638 at the end of 2021 and 1,450 at the end of 2020. These demonstrate the company’s efforts to convert its business from traditional static-billboard advertising to digital displays, which are helping expand the number of new advertising relationships, thereby providing the scope to boost digital revenues.
Industry Tailwinds: Since the cost of advertisement through the OOH medium is also comparatively lower than other media alternatives, the OOH advertising space has been gaining traction, with a significant increase in its market share, in comparison with other forms of media. In the upcoming years, higher technology investments are expected to provide further support to OOH advertising. Capitalizing on this, the company is expanding its footprint and providing unique technology platforms like OUTFRONT Mobile Network to offer advertisers additional data-analytic features and help draw more audiences.
Acquisitions: OUTFRONT Media has also capitalized on acquisitions to enhance its portfolio. The company carried out asset acquisitions for a total of $9.6 million in the first quarter. Moreover, it accomplished several asset acquisitions for a total of $136.5 million in 2021, $18.1 million in 2020 and $69.7 million in 2019. Moreover, in May 2022, it acquired billboard assets from Pacific Outdoor Advertising in Portland, OR and Clark County, WA. These acquired advertising assets include 211 large-format static displays, 21 digital displays, 709 posters and 15 walls. With such expansion efforts, the company remains poised to grow over the long term.
Other Key Picks
Some other key picks from the REIT sector include Terreno Realty (TRNO - Free Report) and Cedar Realty Trust .
The Zacks Consensus Estimate for Terreno Realty’s 2022 FFO per share has marginally moved upward in the past two months to $1.96. TRNO presently carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Cedar Realty Trust’s current-year FFO per share has moved 3.6% northward in the past month to $2.59. CDR carries a Zacks Rank of 2 at present.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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5 Reasons to Add OUTFRONT Media (OUT) to Your Portfolio Now
The relaxation of pandemic-related restrictions is aiding the rebound in the advertising environment and OUTFRONT Media (OUT - Free Report) is poised to gain from this recovery, backed by a solid presence in key markets.
Moreover, this Zacks Rank #1 (Strong Buy) stock has been witnessing an upward trend in funds from operations (FFO) per share estimate revisions for the current year, indicating a favorable outlook for the company. Particularly, the Zacks Consensus Estimate for 2022 FFO per share has been revised a whopping 51.4% upward in two months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Though shares of OUTFRONT Media have declined 9.2% in the past month against its industry's 4.6% growth, given its progress on fundamentals and positive estimate revisions, the stock is likely to keep performing well in the quarters ahead and hence the dip offers a good entry point.
Image Source: Zacks Investment Research
Let’s now delve deeper into its strengths.
Reasons to Buy OUTFRONT Media
Portfolio Diversity: OUT’s advertising sites are geographically diversified, with a solid presence in key markets in the United States and Canada. This geographic diversity enables its clients to reach a national audience and provides the flexibility to tailor campaigns to specific regions or markets. This out-of-home (“OOH”) advertising company not only provides communication and advertising services for several transit authorities but also offers services to various industries, including professional services, healthcare/pharmaceuticals and retail. Hence, its diversity, both industry-wise and geographical, makes the company’s revenues less volatile in nature.
Revenue Strength: Amid the rebound in the advertising environment, OUTFRONT Media is well-poised to make steady progress in improving its top line. Revenues are expected to witness year-over-year growth of 21.9% and 10.7% in 2022 and 2023, respectively, to $1.78 billion and $1.98 billion.
Focus on Digital Billboards: OUTFRONT Media has been making strategic investments in its digital-billboard portfolio over the years. In the first quarter, the company built or converted 22 new digital billboard displays in the United States. Its total digital-billboard displays reached 1,665 at the end of the first quarter of 2022, up from 1,638 at the end of 2021 and 1,450 at the end of 2020. These demonstrate the company’s efforts to convert its business from traditional static-billboard advertising to digital displays, which are helping expand the number of new advertising relationships, thereby providing the scope to boost digital revenues.
Industry Tailwinds: Since the cost of advertisement through the OOH medium is also comparatively lower than other media alternatives, the OOH advertising space has been gaining traction, with a significant increase in its market share, in comparison with other forms of media. In the upcoming years, higher technology investments are expected to provide further support to OOH advertising. Capitalizing on this, the company is expanding its footprint and providing unique technology platforms like OUTFRONT Mobile Network to offer advertisers additional data-analytic features and help draw more audiences.
Acquisitions: OUTFRONT Media has also capitalized on acquisitions to enhance its portfolio. The company carried out asset acquisitions for a total of $9.6 million in the first quarter. Moreover, it accomplished several asset acquisitions for a total of $136.5 million in 2021, $18.1 million in 2020 and $69.7 million in 2019. Moreover, in May 2022, it acquired billboard assets from Pacific Outdoor Advertising in Portland, OR and Clark County, WA. These acquired advertising assets include 211 large-format static displays, 21 digital displays, 709 posters and 15 walls. With such expansion efforts, the company remains poised to grow over the long term.
Other Key Picks
Some other key picks from the REIT sector include Terreno Realty (TRNO - Free Report) and Cedar Realty Trust .
The Zacks Consensus Estimate for Terreno Realty’s 2022 FFO per share has marginally moved upward in the past two months to $1.96. TRNO presently carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Cedar Realty Trust’s current-year FFO per share has moved 3.6% northward in the past month to $2.59. CDR carries a Zacks Rank of 2 at present.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.