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OUTFRONT Media (OUT) Up 54% in 3 Months: Will the Trend Last?
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Shares of OUTFRONT Media (OUT - Free Report) have soared a whopping 53.8% in the past three months, outperforming the industry’s growth of 15.6%.
The New York-based advertising real estate investment trust’s (REIT) diverse portfolio of advertising sites and large-scale presence, efforts to bolster its digital presence and strategic acquisitions over the years have enabled it to ride the growth curve so far.
Analysts seem bullish about this Zacks Rank #1 (Strong Buy) company. The Zacks Consensus Estimate for its 2023 funds from operations (FFO) per share has moved marginally upward over the past two months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Let us now decipher the factors behind the increase in the stock price and check whether the trend will last.
OUTFRONT Media enjoys a geographically diverse portfolio of advertising sites, with presence across the 25 largest markets in the United States and 150 markets in the United States and Canada. The company’s large-scale presence paves the way for its clients to reach a national audience and provides the flexibility to tailor campaigns to specific regions or markets.
The REIT caters to a variety of industries, including professional services, healthcare/pharmaceuticals and retail, enjoying a well-diversified tenant base. The diversification shields it from market volatility and assures stable revenues during economic downturns.
OUTFRONT Media is making concerted efforts to convert its business from traditional static billboard advertising to digital displays and has made strategic investments in its digital billboard portfolio over the years. This has helped the company expand the number of new advertising relationships, providing scope to boost its digital revenues.
Its total digital billboard displays reached 2,105 at the end of the third quarter of 2023, increasing from 1,638 at the end of 2021. Also, in the nine months ended Sep 30, 2023, the company built or converted 64 new digital billboard displays in the United States and 33 in Canada.
It built, converted or replaced 4,706 digital transit and other displays in the United States and 23 in Canada during this period. Such efforts are likely to pay off well in the upcoming quarters, poising the company well for growth. We estimate a year-over-year increase of 4.6% in billboard revenues in 2023.
Most importantly, the company is leveraging out-of-home (OOH) advertising, which has a lower cost compared with other forms of media, to drive its performance. This low-cost nature of the OOH advertising space is helping it gain traction and increase its market share compared to other media alternatives.
In the upcoming years, higher technology investments are expected to provide further support to OOH advertising. Capitalizing on this, the company is expanding its footprint and providing unique technology platforms like OUTFRONT Mobile Network to offer advertisers additional data-analytic features and help draw more audiences.
OUTFRONT Media is also focused on enhancing its portfolio quality via strategic acquisitions. Although the company has been cautious on the acquisition front lately due to high interest rates and purchased assets for around $30.7 million in the nine months ended Sep 30, 2023, it completed acquisitions worth $353.9 million in 2022. With such expansion efforts, it remains poised to grow over the long term.
Further, the company’s current cash flow growth is projected at 62.2%, well ahead of the industry’s estimated 8.17% growth.
Other Stocks to Consider
Some other top-ranked stocks from the REIT sector are VICI Properties (VICI - Free Report) , EastGroup Properties (EGP - Free Report) and Stag Industrial (STAG - Free Report) , each carrying a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for VICI Properties’ 2023 FFO per share is pegged at $2.15, indicating a year-over-year increase of 11.4%.
The Zacks Consensus Estimate for EastGroup Properties’ 2023 FFO per share is pegged at $7.72, implying a year-over-year rise of 10.3%.
The Zacks Consensus Estimate for Stag Industrial’s 2023 FFO per share stands at $2.28, suggesting year-over-year growth of 3.2%.
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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OUTFRONT Media (OUT) Up 54% in 3 Months: Will the Trend Last?
Shares of OUTFRONT Media (OUT - Free Report) have soared a whopping 53.8% in the past three months, outperforming the industry’s growth of 15.6%.
The New York-based advertising real estate investment trust’s (REIT) diverse portfolio of advertising sites and large-scale presence, efforts to bolster its digital presence and strategic acquisitions over the years have enabled it to ride the growth curve so far.
Analysts seem bullish about this Zacks Rank #1 (Strong Buy) company. The Zacks Consensus Estimate for its 2023 funds from operations (FFO) per share has moved marginally upward over the past two months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Let us now decipher the factors behind the increase in the stock price and check whether the trend will last.
OUTFRONT Media enjoys a geographically diverse portfolio of advertising sites, with presence across the 25 largest markets in the United States and 150 markets in the United States and Canada. The company’s large-scale presence paves the way for its clients to reach a national audience and provides the flexibility to tailor campaigns to specific regions or markets.
The REIT caters to a variety of industries, including professional services, healthcare/pharmaceuticals and retail, enjoying a well-diversified tenant base. The diversification shields it from market volatility and assures stable revenues during economic downturns.
OUTFRONT Media is making concerted efforts to convert its business from traditional static billboard advertising to digital displays and has made strategic investments in its digital billboard portfolio over the years. This has helped the company expand the number of new advertising relationships, providing scope to boost its digital revenues.
Its total digital billboard displays reached 2,105 at the end of the third quarter of 2023, increasing from 1,638 at the end of 2021. Also, in the nine months ended Sep 30, 2023, the company built or converted 64 new digital billboard displays in the United States and 33 in Canada.
It built, converted or replaced 4,706 digital transit and other displays in the United States and 23 in Canada during this period. Such efforts are likely to pay off well in the upcoming quarters, poising the company well for growth. We estimate a year-over-year increase of 4.6% in billboard revenues in 2023.
Most importantly, the company is leveraging out-of-home (OOH) advertising, which has a lower cost compared with other forms of media, to drive its performance. This low-cost nature of the OOH advertising space is helping it gain traction and increase its market share compared to other media alternatives.
In the upcoming years, higher technology investments are expected to provide further support to OOH advertising. Capitalizing on this, the company is expanding its footprint and providing unique technology platforms like OUTFRONT Mobile Network to offer advertisers additional data-analytic features and help draw more audiences.
OUTFRONT Media is also focused on enhancing its portfolio quality via strategic acquisitions. Although the company has been cautious on the acquisition front lately due to high interest rates and purchased assets for around $30.7 million in the nine months ended Sep 30, 2023, it completed acquisitions worth $353.9 million in 2022. With such expansion efforts, it remains poised to grow over the long term.
Further, the company’s current cash flow growth is projected at 62.2%, well ahead of the industry’s estimated 8.17% growth.
Other Stocks to Consider
Some other top-ranked stocks from the REIT sector are VICI Properties (VICI - Free Report) , EastGroup Properties (EGP - Free Report) and Stag Industrial (STAG - Free Report) , each carrying a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for VICI Properties’ 2023 FFO per share is pegged at $2.15, indicating a year-over-year increase of 11.4%.
The Zacks Consensus Estimate for EastGroup Properties’ 2023 FFO per share is pegged at $7.72, implying a year-over-year rise of 10.3%.
The Zacks Consensus Estimate for Stag Industrial’s 2023 FFO per share stands at $2.28, suggesting year-over-year growth of 3.2%.
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.