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Lamar Advertising Stock Rises 22% YTD: Will the Trend Last?
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Shares of Lamar Advertising (LAMR - Free Report) have rallied 22.2% year to date against its industry’s growth of 11%. Its impressive footprint of outdoor advertising assets across the United States and Canada positions it well to ride the growth curve.
An unmatched logo signs business, a diversified tenant base across various sectors and a focus on local businesses assure stable revenues. Efforts to expand the digital platform and technological advancements in the low-cost, out-of-home (OOH) advertising platform also bode well for long-term growth.
Its second-quarter 2024 results reflected a rise in revenues driven by strength in local and regional sales. Apart from revenue growth, continued cost containment efforts helped LAMR achieve nearly 7% adjusted EBITDA growth and 9.5% AFFO per share growth.
Image Source: Zacks Investment Research
Late in August, Lamar announced a 7.7% sequential hike in its quarterly cash dividend. The company will now pay a dividend of $1.40 per share, up from the $1.30 paid out earlier. The increased dividend will be paid out on Sep. 30 to stockholders of record of the company’s Class A common stock and Class B common stock on Sep. 18, 2024.
Analysts also seem bullish on this Zacks Rank #2 (Buy) company. Over the past two months, the Zacks Consensus Estimate for both 2024 and 2025 funds from operations (FFO) per share has moved north.
Estimate Revision
Image Source: Zacks Investment Research
Factors Behind LAMR Stock Price Surge: Will This Trend Last?
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. Lamar also sources a significant part of its revenues from local businesses with a diversified base of tenants. This leads to less volatility in revenues. In the second quarter of 2024, local and regional sales accounted for 79% of the company’s billboard revenues. Moreover, local and regional sales reported growth for the 13th consecutive quarter.
Over recent years, Lamar 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.
Given the technological advancements and low-cost nature of out-of-home (OOH) advertising, it has been gaining traction in recent years. Lamar’s strategic acquisitions of outdoor advertising assets in its existing and new markets have been fruitful. It completed 36 acquisitions for a total purchase price of $139 million in 2023. During the first half of 2024, LAMR completed multiple acquisitions for a total cash purchase price of around $28.2 million. With such expansion efforts, it is poised to ride the growth curve.
Lamar has enjoyed historical cash flow growth of 8.25% compared with 2.57% of the industry. As of June 30, 2024, Lamar Advertising had a total liquidity of $744.3 million. This REIT’s trailing 12-month return on equity (ROE) highlights its growth potential. Lamar’s ROE is 42.18% compared with the industry’s average of 3.26%. 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 the last five years, the company has raised its dividend eight times. Its five-year annualized dividend growth rate is 16.50%, which is encouraging. Such efforts raise investors’ optimism about the stock. Check Lamar Advertising’s dividend history here.
Image: Bigstock
Lamar Advertising Stock Rises 22% YTD: Will the Trend Last?
Shares of Lamar Advertising (LAMR - Free Report) have rallied 22.2% year to date against its industry’s growth of 11%. Its impressive footprint of outdoor advertising assets across the United States and Canada positions it well to ride the growth curve.
An unmatched logo signs business, a diversified tenant base across various sectors and a focus on local businesses assure stable revenues. Efforts to expand the digital platform and technological advancements in the low-cost, out-of-home (OOH) advertising platform also bode well for long-term growth.
Its second-quarter 2024 results reflected a rise in revenues driven by strength in local and regional sales. Apart from revenue growth, continued cost containment efforts helped LAMR achieve nearly 7% adjusted EBITDA growth and 9.5% AFFO per share growth.
Image Source: Zacks Investment Research
Late in August, Lamar announced a 7.7% sequential hike in its quarterly cash dividend. The company will now pay a dividend of $1.40 per share, up from the $1.30 paid out earlier. The increased dividend will be paid out on Sep. 30 to stockholders of record of the company’s Class A common stock and Class B common stock on Sep. 18, 2024.
Analysts also seem bullish on this Zacks Rank #2 (Buy) company. Over the past two months, the Zacks Consensus Estimate for both 2024 and 2025 funds from operations (FFO) per share has moved north.
Estimate Revision
Image Source: Zacks Investment Research
Factors Behind LAMR Stock Price Surge: Will This Trend Last?
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. Lamar also sources a significant part of its revenues from local businesses with a diversified base of tenants. This leads to less volatility in revenues. In the second quarter of 2024, local and regional sales accounted for 79% of the company’s billboard revenues. Moreover, local and regional sales reported growth for the 13th consecutive quarter.
Over recent years, Lamar 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.
Given the technological advancements and low-cost nature of out-of-home (OOH) advertising, it has been gaining traction in recent years. Lamar’s strategic acquisitions of outdoor advertising assets in its existing and new markets have been fruitful. It completed 36 acquisitions for a total purchase price of $139 million in 2023. During the first half of 2024, LAMR completed multiple acquisitions for a total cash purchase price of around $28.2 million. With such expansion efforts, it is poised to ride the growth curve.
Lamar has enjoyed historical cash flow growth of 8.25% compared with 2.57% of the industry. As of June 30, 2024, Lamar Advertising had a total liquidity of $744.3 million. This REIT’s trailing 12-month return on equity (ROE) highlights its growth potential. Lamar’s ROE is 42.18% compared with the industry’s average of 3.26%. 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 the last five years, the company has raised its dividend eight times. Its five-year annualized dividend growth rate is 16.50%, which is encouraging. Such efforts raise investors’ optimism about the stock. Check Lamar Advertising’s dividend history here.
Other Stocks to Consider
Some other top-ranked stocks from the REIT sector are Crown Castle Inc. (CCI - Free Report) and Cousins Properties (CUZ - 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 Crown Castle’s current-year FFO per share has moved marginally north in the past two months to $6.97.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has been raised marginally over the past week to $2.67.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.