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Lamar Advertising Co.

LAMR

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Lamar Advertising Co. (LAMR - Analyst Report) reported a much narrower-than-anticipated loss in its first quarter, and is expected to report a 28% year-over-year jump in earnings for its second quarter on August 8. Over the past four quarters, this Zacks #1 Rank (Strong Buy) advertising agency has beaten twice, matched once and missed once, generating an average earnings surprise of 26%.

Estimates Move Higher After Upbeat First Quarter

On May 3, Lamar posted a loss of 4 cents per share, narrower than both the year-ago loss and the Zacks Consensus Estimate for a loss of 14 cents. Net sales jumped 4% year over year and registered a 4.3% organic growth, above management’s guidance of 3.0%.

Over the last 60 days, the Zacks Consensus Estimates for 2012 and 2013 each went up by a penny to 18 cents and 62 cents, respectively. The estimates represent year-over-year growth of 822.7% for 2012 and 235.0% for 2013.

Valuation

Considering the company’s growth prospects, its valuation looks reasonable on a P/B basis. Lamar is currently trading at a P/B ratio of 3.1, up 16% from the peer group average of 2.6. Besides P/B, the stock is also trading at a forward P/E of 146.1, a P/S of 2.2 and offers ROE of 2.2%, compared with the peer group’s P/E of 13.2, P/S of 0.7 and ROE of 10.3%.

The chart below clearly shows that after a plunge in 2009, the stock is back on the recovery path. Moreover, the Zacks Consensus Estimate is scaling high for the stock in the years ahead.

Headquartered in Baton Rouge, Louisiana, Lamar Advertising Co was founded in 1989 and provides outdoor advertising services in the United States, Canada, and Puerto Rico. The company’s prime advertising modes include billboards, logo signs, and transit advertising displays.

As of December 31, 2011, it operated over 150 outdoor advertising companies together with 143,000 billboard advertising displays in 44 states, Canada and Puerto Rico; logo businesses in 22 states and the province of Ontario, Canada and approximately 60 transit advertising franchises in the United States, Canada and Puerto Rico.

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