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OUTFRONT Media (OUT) Up 6% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for OUTFRONT Media Inc. (OUT - Free Report) . Shares have added nearly 6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
OUTFRONT Media's Q4 FFO, Revenues Beat Estimates
OUTFRONT Media’s fourth-quarter 2016 adjusted FFO per share of $0.56 exceeded the Zacks Consensus Estimate of $0.51, as well as the prior-year quarter figure of $0.55.
Revenues for the quarter came in at $397.4 million, beating the Zacks Consensus Estimate of $392 million. However, revenues declined 0.3% from the year-ago tally of $386.7 million.
For full-year 2016, adjusted FFO per share came in at $2.13, higher than both the Zacks Consensus Estimate and the prior-year quarter tally of $2.07 and $1.95, respectively. Revenues of $1.51 billion was almost in line with both the Zacks Consensus Estimate and the prior-year figure.
Quarter in Detail
Billboard revenues of $276.5 million in the quarter declined 0.9% year over year, reflecting the disposition of the company’s outdoor advertising business in Latin America. However, the negative was partly mitigated by an uptick in average revenue per display (yield) and increased revenues from the conversion of static billboards to digital.
On the other hand, transit and other revenues increased 1.2% from the prior-year quarter to 120.9 million. Results were mainly attributed to growth in transit advertising in the U.S. and robust results in the sports marketing operating segment.
Operating income during the reported quarter was $58.2 million, whereas operating loss was $47.5 million in fourth-quarter 2015. Notably, operating expenses of $215.2 million in fourth quarter 2016 declined 1.6% from a year ago, mainly due to the disposition of Latin America business.
Adjusted operating income before depreciation and amortization declined 0.3% year over year to $117.2 million. Net cash flow resulting from operating activities for the year ending Dec 31, 2016 came in at $287.1 million, down from $293.1 million in the comparable prior-year period.
As of Dec 31, 2016, OUTFRONT’s liquidity position comprised cash of $65.2 million. It also included $393.3 million of availability under its $425 million revolving credit facility, net of $31.7 million of issued letters of credit against the revolving credit facility.
Segment Performance
The company has three operating segments, namely U.S. Billboard and Transit, which is included in the U.S. Media reportable segment, International and Sports Marketing, which are included in Other.
During the quarter, revenues at the U.S. media came in at $1.4 billion, denoting an increase of 3.7% from a year ago. Rise in local revenues, an increase in average revenue per display (yield) and conversion of static billboards to digital attributed to this increase.
On the other hand, revenues at the Other segment plummeted 29.1% year over year to $120.1 million as a result of disposition of Latin America. This was partly offset by solid results in the company’s sports marketing operating segment.
Excluding stock-based compensation, corporate costs during the quarter were $42.6 million, up $4.8 million from the prior-year quarter.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one downward revision for the current quarter. In the past month, the consensus estimate also shifted downward by 21.2% due to these changes.
At this time, OUTFRONT Media's stock has an average Growth Score of 'C', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors then momentum and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly, the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
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OUTFRONT Media (OUT) Up 6% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for OUTFRONT Media Inc. (OUT - Free Report) . Shares have added nearly 6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
OUTFRONT Media's Q4 FFO, Revenues Beat Estimates
OUTFRONT Media’s fourth-quarter 2016 adjusted FFO per share of $0.56 exceeded the Zacks Consensus Estimate of $0.51, as well as the prior-year quarter figure of $0.55.
Revenues for the quarter came in at $397.4 million, beating the Zacks Consensus Estimate of $392 million. However, revenues declined 0.3% from the year-ago tally of $386.7 million.
For full-year 2016, adjusted FFO per share came in at $2.13, higher than both the Zacks Consensus Estimate and the prior-year quarter tally of $2.07 and $1.95, respectively. Revenues of $1.51 billion was almost in line with both the Zacks Consensus Estimate and the prior-year figure.
Quarter in Detail
Billboard revenues of $276.5 million in the quarter declined 0.9% year over year, reflecting the disposition of the company’s outdoor advertising business in Latin America. However, the negative was partly mitigated by an uptick in average revenue per display (yield) and increased revenues from the conversion of static billboards to digital.
On the other hand, transit and other revenues increased 1.2% from the prior-year quarter to 120.9 million. Results were mainly attributed to growth in transit advertising in the U.S. and robust results in the sports marketing operating segment.
Operating income during the reported quarter was $58.2 million, whereas operating loss was $47.5 million in fourth-quarter 2015. Notably, operating expenses of $215.2 million in fourth quarter 2016 declined 1.6% from a year ago, mainly due to the disposition of Latin America business.
Adjusted operating income before depreciation and amortization declined 0.3% year over year to $117.2 million. Net cash flow resulting from operating activities for the year ending Dec 31, 2016 came in at $287.1 million, down from $293.1 million in the comparable prior-year period.
As of Dec 31, 2016, OUTFRONT’s liquidity position comprised cash of $65.2 million. It also included $393.3 million of availability under its $425 million revolving credit facility, net of $31.7 million of issued letters of credit against the revolving credit facility.
Segment Performance
The company has three operating segments, namely U.S. Billboard and Transit, which is included in the U.S. Media reportable segment, International and Sports Marketing, which are included in Other.
During the quarter, revenues at the U.S. media came in at $1.4 billion, denoting an increase of 3.7% from a year ago. Rise in local revenues, an increase in average revenue per display (yield) and conversion of static billboards to digital attributed to this increase.
On the other hand, revenues at the Other segment plummeted 29.1% year over year to $120.1 million as a result of disposition of Latin America. This was partly offset by solid results in the company’s sports marketing operating segment.
Excluding stock-based compensation, corporate costs during the quarter were $42.6 million, up $4.8 million from the prior-year quarter.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one downward revision for the current quarter. In the past month, the consensus estimate also shifted downward by 21.2% due to these changes.
OUTFRONT Media Inc. Price and Consensus
OUTFRONT Media Inc. Price and Consensus | OUTFRONT Media Inc. Quote
VGM Scores
At this time, OUTFRONT Media's stock has an average Growth Score of 'C', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors then momentum and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly, the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.