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Is Lamar Advertising Stock a Solid Pick for Your Portfolio Now?
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Lamar Advertising’s (LAMR - Free Report) impressive footprint of outdoor advertising assets across the United States and Canada positions it well to ride the growth curve. An unmatched logo signs business, a diversified tenant base across various sectors and a focus on local businesses assure stable revenues.
Efforts to expand the digital platform and technological advancements in the low-cost, out-of-home (OOH) advertising platform also bode well for long-term growth. Strategic expansions are expected to provide it an edge.
However, expected choppiness in the national business in the near term and competition from other outdoor advertisers and other forms of media are major concerns for Lamar.
Shares of this Zacks Rank #2 (Buy) company have risen 23.5% year to date, outperforming the industry’s growth of 7.5%. Also, the recent estimate revision trend for 2024 funds from operations (FFO) per share indicates a favorable outlook, with estimates moving north over the past two months.
Image Source: Zacks Investment Research
What’s Aiding Lamar Advertising?
Lamar Advertising enjoys an impressive national footprint and holds a leading position as a provider of logo signs in the United States. It enjoys a diversified tenant base. Lamar also sources a significant part of its revenues from local businesses, with a diversified base of tenants. This generally leads to less volatility in revenues. In the second quarter of 2024, local and regional sales accounted for 79% of the company’s billboard revenues. Moreover, local and regional sales reported growth for the 13th consecutive quarter.
Over the recent years, Lamar Advertising has made concerted efforts to upgrade its portfolio, increasing occupancy in its existing advertising displays and enabling it to enjoy a significant market share in the U.S. outdoor advertising business. Lamar offers customers the largest network of digital billboards in the United States, with more than 4,800 displays as of the end of the second quarter of 2024. The company has added a large number of digital screens through acquisitions and internal conversions over the past several years.
OOH advertising has been growing at a rapid pace and continues to increase the company’s market share in comparison with other forms of media. In this environment, Lamar’s expansion activities over the recent years bode well for long-term growth. During the first half of 2024, the company completed multiple acquisitions for a total cash purchase price of around $28.2 million. It completed 36 acquisitions for a total purchase price of $139 million in 2023 and 73 acquisitions of outdoor advertising assets for $479.8 million in 2022. With such expansion efforts, it is poised to ride the growth curve.
Lamar has enjoyed historical cash flow growth of 8.25% compared with 2.57% of the industry. As of June 30, 2024, Lamar Advertising had a total liquidity of $744.3 million. Moreover, this REIT’s trailing 12-month return on equity (ROE) highlights its growth potential. Lamar’s ROE is 42.18% compared with the industry’s average of 3.21%. This reflects that the company reinvests more efficiently compared with the industry.
Solid dividend payouts remain the biggest attraction for REIT investors, and Lamar has been committed to the same. In August 2024, the REIT increased its quarterly dividend payment on its Class A common stock and Class B common stock to $1.40 per share from $1.30 paid earlier, denoting a 7.7% hike. In the last five years, the company has raised its dividend eight times, and its five-year annualized dividend growth rate is 16.50%, which is encouraging. Such efforts raise investors’ optimism in the stock.
Key Concerns for Lamar Advertising
Lamar Advertising faces stiff competition from other outdoor advertisers for customers, display locations and structures. The company also competes with other media, including conventional platforms such as television, radio, print media, direct mail marketers and online, mobile & social media platforms. These diversified competitors have the advantage of cross-selling complementary advertising products to advertisers.
So, despite a significant portion of the company’s revenues coming from local businesses, we believe this competition from national players may partly impede its growth momentum. Though local and regional sales grew for the 13th consecutive quarter, the company’s national business continues to be a headwind for its overall revenue growth.
The Zacks Consensus Estimate for Crown Castle’s 2024 FFO per share has moved marginally up over the past three months to $6.97.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share is pegged at $2.67, which suggests 1.9% year-over-year growth.
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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Is Lamar Advertising Stock a Solid Pick for Your Portfolio Now?
Lamar Advertising’s (LAMR - Free Report) impressive footprint of outdoor advertising assets across the United States and Canada positions it well to ride the growth curve. An unmatched logo signs business, a diversified tenant base across various sectors and a focus on local businesses assure stable revenues.
Efforts to expand the digital platform and technological advancements in the low-cost, out-of-home (OOH) advertising platform also bode well for long-term growth. Strategic expansions are expected to provide it an edge.
However, expected choppiness in the national business in the near term and competition from other outdoor advertisers and other forms of media are major concerns for Lamar.
Shares of this Zacks Rank #2 (Buy) company have risen 23.5% year to date, outperforming the industry’s growth of 7.5%. Also, the recent estimate revision trend for 2024 funds from operations (FFO) per share indicates a favorable outlook, with estimates moving north over the past two months.
Image Source: Zacks Investment Research
What’s Aiding Lamar Advertising?
Lamar Advertising enjoys an impressive national footprint and holds a leading position as a provider of logo signs in the United States. It enjoys a diversified tenant base. Lamar also sources a significant part of its revenues from local businesses, with a diversified base of tenants. This generally leads to less volatility in revenues. In the second quarter of 2024, local and regional sales accounted for 79% of the company’s billboard revenues. Moreover, local and regional sales reported growth for the 13th consecutive quarter.
Over the recent years, Lamar Advertising has made concerted efforts to upgrade its portfolio, increasing occupancy in its existing advertising displays and enabling it to enjoy a significant market share in the U.S. outdoor advertising business. Lamar offers customers the largest network of digital billboards in the United States, with more than 4,800 displays as of the end of the second quarter of 2024. The company has added a large number of digital screens through acquisitions and internal conversions over the past several years.
OOH advertising has been growing at a rapid pace and continues to increase the company’s market share in comparison with other forms of media. In this environment, Lamar’s expansion activities over the recent years bode well for long-term growth. During the first half of 2024, the company completed multiple acquisitions for a total cash purchase price of around $28.2 million. It completed 36 acquisitions for a total purchase price of $139 million in 2023 and 73 acquisitions of outdoor advertising assets for $479.8 million in 2022. With such expansion efforts, it is poised to ride the growth curve.
Lamar has enjoyed historical cash flow growth of 8.25% compared with 2.57% of the industry. As of June 30, 2024, Lamar Advertising had a total liquidity of $744.3 million. Moreover, this REIT’s trailing 12-month return on equity (ROE) highlights its growth potential. Lamar’s ROE is 42.18% compared with the industry’s average of 3.21%. This reflects that the company reinvests more efficiently compared with the industry.
Solid dividend payouts remain the biggest attraction for REIT investors, and Lamar has been committed to the same. In August 2024, the REIT increased its quarterly dividend payment on its Class A common stock and Class B common stock to $1.40 per share from $1.30 paid earlier, denoting a 7.7% hike. In the last five years, the company has raised its dividend eight times, and its five-year annualized dividend growth rate is 16.50%, which is encouraging. Such efforts raise investors’ optimism in the stock.
Key Concerns for Lamar Advertising
Lamar Advertising faces stiff competition from other outdoor advertisers for customers, display locations and structures. The company also competes with other media, including conventional platforms such as television, radio, print media, direct mail marketers and online, mobile & social media platforms. These diversified competitors have the advantage of cross-selling complementary advertising products to advertisers.
So, despite a significant portion of the company’s revenues coming from local businesses, we believe this competition from national players may partly impede its growth momentum. Though local and regional sales grew for the 13th consecutive quarter, the company’s national business continues to be a headwind for its overall revenue growth.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Crown Castle Inc. (CCI - Free Report) and Cousins Properties (CUZ - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Crown Castle’s 2024 FFO per share has moved marginally up over the past three months to $6.97.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share is pegged at $2.67, which suggests 1.9% year-over-year growth.
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.