A month has gone by since the last earnings report for Outfront Media (OUT - Free Report) . Shares have added about 11.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Outfront Media 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 drivers.
OUTFRONT Media Reports Adjusted FFO Deficit in Q2
OUTFRONT Media’s second-quarter 2020 adjusted FFO share was a deficit of 15 cents. The Zacks Consensus Estimate for the same was a deficit of 17 cents. In the prior-year quarter, the company had reported adjusted FFO per share of 67 cents.
Revenues came in at $232.9 million for the second quarter, missing the Zacks Consensus Estimate of $239.8 million. The revenue figure also plummeted 49.4% year over year.
The company’s second quarter results reflect a decline in demand for its services and fall in customer advertising spends due to the adverse impact of the coronavirus pandemic.
The company has scrapped its dividend payment for the second quarter in light of the pandemic related uncertainties. However, the company expects to meet its minimum annual 2020 REIT distribution requirements.
Quarter in Detail
Billboard revenues came in at $188.5 million, indicating a year-over-year plunge of 38.4%. This downside resulted from lower average revenue per display, referred to as yield. Transit and other revenues of $44.4 million slumped 71.2%, year on year. Fall in yield resulted in this decline.
Additionally, the company reported an operating loss of $25.9 million in the second quarter, as against the operating income of $88.7 million registered in the prior year quarter.
Operating expenses of $154 million plunged 35.9% year over year. This mainly resulted from lower transit franchise expense, decreased posting, maintenance and other expenses, and a drop in billboard property lease expense.
Net cash flow, resulting from operating activities for the quarter ended Jun 30, 2020, came in at $50.7 million, plummeting 39.3% year on year. This primarily reflects the negative impact of decrease in net income.
As of Jun 30, 2020, OUTFRONT Media had a solid liquidity position, which comprised unrestricted cash of $647.8 million and $498.4 million of availability under its $500-million revolving credit facility, net of $1.6 million of issued letters of credit. During the second quarter, the company sold no shares under its at-the-market (ATM) equity program and the company had $232.5 million available under its ATM program at quarter end.
How Have Estimates Been Moving Since Then?
Estimates revision followed a downward path over the past two months.
At this time, Outfront Media has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outfront Media has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.