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Shares of Lamar Advertising (LAMR - Free Report) have risen 11.7% year to date against its industry’s decline of 10.2%. The company currently carries a Zacks Ranks #2 (Buy).
Earlier this month, this real estate investment trust (REIT), headquartered in Baton Rouge, LA, reported first-quarter 2024 adjusted funds from operations (AFFO) per share of $1.54, which beat the Zacks Consensus Estimate of $1.52. The figure also compared favorably with the prior-year quarter's tally of $1.41. Quarterly net revenues of $498.2 million increased 5.7% on a year-over-year basis and beat the consensus mark of $488.8 million.
Per the company’s chief executive, Sean Reilly, “Our first-quarter results exceeded our internal expectations, with particular strength in local sales. In addition, we returned to same-store growth in digital, and the rest of 2024 is shaping up well.” Management also raised guidance for 2024 AFFO to a range of $7.75-$7.90 per share.
Image Source: Zacks Investment Research
Let us decipher the factors behind the surge in the stock price.
Lamar is one of the largest owners and operators of outdoor advertising structures in the United States. It enjoys an impressive national footprint and holds a leading position as a provider of logo signs in the United States. It enjoys a diversified tenant base, comprising tenants from the services, health care, restaurants, retailers, automotive, insurance and gaming categories.
Lamar also sources a significant part of its revenues from local businesses, with a diversified base of tenants. This generally leads to less volatility in revenues. In the first quarter of 2024, local and regional sales accounted for 82% of the company’s billboard revenues, up from the fourth quarter’s 78%. Moreover, local and regional sales reported growth for the 12th consecutive quarter.
Over the recent years, the company has made concerted efforts to upgrade its portfolio, increasing occupancy in its existing advertising displays and enabling it to enjoy a significant market share in the U.S. outdoor advertising business. The company's increased focus on bolstering its digital capabilities augurs well for long-term growth. Lamar’s digital revenues accounted for 29% of its billboard billings in the first quarter.
Given the technological advancements and low-cost nature of out-of-home (OOH) advertising, it has been gaining traction in recent years. Therefore, Lamar’s strategic acquisitions of outdoor advertising assets in its existing and new markets have been fruitful.
In 2021, Lamar completed acquisitions for a total cash purchase price of around $312.3 million. Further, in 2022, the company completed 73 acquisitions of outdoor advertising assets for $479.8 million. Following two active years on the M&A front, volumes in its acquisition pipeline have moderated.
However, Lamar completed 36 acquisitions for a total purchase price of $139 million in 2023. In the first quarter of 2024, the company completed acquisitions for an aggregate purchase price of approximately $18.3 million. With such expansion efforts, it is poised to ride the growth curve.
On the balance sheet front, as of Mar 31, 2024, Lamar Advertising had a total liquidity of $634.8 million.
Lamar has enjoyed historical cash flow growth of 8.25% compared with 2.57% of the industry. Moreover, this REIT’s trailing 12-month return on equity (ROE) highlights its growth potential. Lamar’s ROE is 41.86% compared with the industry’s average of 3.06%. This reflects that the company reinvests more efficiently compared with the industry.
Solid dividend payouts remain the biggest attraction for REIT investors, and Lamar has been committed to the same. In February 2024, the firm increased its quarterly dividend payment on its Class A common stock and Class B common stock to $1.30 per share from $1.25 paid out earlier, denoting a 4% hike. In the last five years, the company has raised its dividend seven times. Its five-year annualized dividend growth rate is 14.39%, which is encouraging. Such efforts raise investors’ optimism about the stock.
The Zacks Consensus Estimate for Rexford Industrial Realty’s 2024 FFO per share stands at $2.34, which indicates an increase of 6.85% from the year-ago period’s actual.
The Zacks Consensus Estimate for OUTFRONT Media’s 2024 FFO per share is pegged at $1.71, which suggests 4.27% year-over-year growth.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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Lamar Advertising's (LAMR) Stock Gains 11.7% YTD: Here's Why
Shares of Lamar Advertising (LAMR - Free Report) have risen 11.7% year to date against its industry’s decline of 10.2%. The company currently carries a Zacks Ranks #2 (Buy).
Earlier this month, this real estate investment trust (REIT), headquartered in Baton Rouge, LA, reported first-quarter 2024 adjusted funds from operations (AFFO) per share of $1.54, which beat the Zacks Consensus Estimate of $1.52. The figure also compared favorably with the prior-year quarter's tally of $1.41. Quarterly net revenues of $498.2 million increased 5.7% on a year-over-year basis and beat the consensus mark of $488.8 million.
Per the company’s chief executive, Sean Reilly, “Our first-quarter results exceeded our internal expectations, with particular strength in local sales. In addition, we returned to same-store growth in digital, and the rest of 2024 is shaping up well.” Management also raised guidance for 2024 AFFO to a range of $7.75-$7.90 per share.
Image Source: Zacks Investment Research
Let us decipher the factors behind the surge in the stock price.
Lamar is one of the largest owners and operators of outdoor advertising structures in the United States. It enjoys an impressive national footprint and holds a leading position as a provider of logo signs in the United States. It enjoys a diversified tenant base, comprising tenants from the services, health care, restaurants, retailers, automotive, insurance and gaming categories.
Lamar also sources a significant part of its revenues from local businesses, with a diversified base of tenants. This generally leads to less volatility in revenues. In the first quarter of 2024, local and regional sales accounted for 82% of the company’s billboard revenues, up from the fourth quarter’s 78%. Moreover, local and regional sales reported growth for the 12th consecutive quarter.
Over the recent years, the company has made concerted efforts to upgrade its portfolio, increasing occupancy in its existing advertising displays and enabling it to enjoy a significant market share in the U.S. outdoor advertising business. The company's increased focus on bolstering its digital capabilities augurs well for long-term growth. Lamar’s digital revenues accounted for 29% of its billboard billings in the first quarter.
Given the technological advancements and low-cost nature of out-of-home (OOH) advertising, it has been gaining traction in recent years. Therefore, Lamar’s strategic acquisitions of outdoor advertising assets in its existing and new markets have been fruitful.
In 2021, Lamar completed acquisitions for a total cash purchase price of around $312.3 million. Further, in 2022, the company completed 73 acquisitions of outdoor advertising assets for $479.8 million. Following two active years on the M&A front, volumes in its acquisition pipeline have moderated.
However, Lamar completed 36 acquisitions for a total purchase price of $139 million in 2023. In the first quarter of 2024, the company completed acquisitions for an aggregate purchase price of approximately $18.3 million. With such expansion efforts, it is poised to ride the growth curve.
On the balance sheet front, as of Mar 31, 2024, Lamar Advertising had a total liquidity of $634.8 million.
Lamar has enjoyed historical cash flow growth of 8.25% compared with 2.57% of the industry. Moreover, this REIT’s trailing 12-month return on equity (ROE) highlights its growth potential. Lamar’s ROE is 41.86% compared with the industry’s average of 3.06%. This reflects that the company reinvests more efficiently compared with the industry.
Solid dividend payouts remain the biggest attraction for REIT investors, and Lamar has been committed to the same. In February 2024, the firm increased its quarterly dividend payment on its Class A common stock and Class B common stock to $1.30 per share from $1.25 paid out earlier, denoting a 4% hike. In the last five years, the company has raised its dividend seven times. Its five-year annualized dividend growth rate is 14.39%, which is encouraging. Such efforts raise investors’ optimism about the stock.
Other Stocks to Consider
Some other top-ranked stocks from the REIT sector are Rexford Industrial Realty, Inc. (REXR - Free Report) and OUTFRONT Media Inc. (OUT - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Rexford Industrial Realty’s 2024 FFO per share stands at $2.34, which indicates an increase of 6.85% from the year-ago period’s actual.
The Zacks Consensus Estimate for OUTFRONT Media’s 2024 FFO per share is pegged at $1.71, which suggests 4.27% year-over-year growth.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.