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Here's Why It Is Wise to Hold Lamar Advertising (LAMR) Stock Now

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Lamar Advertising Company (LAMR - Free Report) enjoys an impressive national footprint and is one of the leading providers of logo signs in the United States. The company’s diverse tenant base also bodes well. Additionally, it generates a significant part of revenues from local businesses, aiding stability in the top line.

Moreover, Lamar enjoys considerable market share in the U.S. outdoor advertising business and has made substantial efforts to upgrade the company’s portfolio in recent years, boosting occupancy in its existing advertising displays. The company ended third-quarter 2020 with 3,600 digital units, marking a rise of 58 units from the end of 2019.

However, the dent in advertising values due to the pandemic is a key pressing concern. Outdoor travel has taken a hit and subsequently, demand for Lamar’s services has been affected. There is a reduction in customer advertising expenditures. Though the situation is improving gradually and the company’s third-quarter performance was aided by higher-than-expected sales, any significant turnaround is unlikely in the near term given the current turbulence in the economy and related setbacks.

Also, the company’s high debt level is worrisome. Lamar’s total debt to total capital of 72.2% is high. Moreover, the pandemic-induced slowdown will likely continue denting top-line growth and hurt cash flow from operations. Besides, in August, Moody’s downgraded the company’s long-term rating as the rating agency believes that the outdoor advertising activities remain heavily dependent on consumer spending, which is expected to remain subdued for now.

Further, the Zacks Consensus Estimate for funds from operations (FFO) per share remained unchanged at $4.82 and $6.55 for 2020 and 2021, respectively, in the past month.

Also, shares of this Zacks Rank #3 (Hold) company have lost 10.8% year to date compared with the 4.5% decline recorded by the industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Stocks to Consider

Alpine Income Property Trust, Inc.’s (PINE - Free Report) Zacks Consensus Estimate for the ongoing-year FFO per share moved 1.7% upward to $1.21 in the past month. The stock currently carries a Zacks Rank of 2 (Buy).

Arbor Realty Trust, Inc.’s (ABR - Free Report) FFO per share estimate for 2020 moved up 11.7% to $1.62 in the last month. The stock currently carries a Zacks Rank of 2.

CareTrust REIT, Inc.’s (CTRE - Free Report) Zacks Consensus Estimate for the current year’s FFO per share moved 1.5% north to $1.36 in a month’s time. The stock currently carries a Zacks Rank of 2.

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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