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Why Is OUTFRONT Media (OUT) Down 2.8% Since the Last Earnings Report?

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It has been about a month since the last earnings report for OUTFRONT Media Inc. (OUT - Free Report) . Shares have lost about 2.8% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 Q1 FFO In Line with Estimates, Declines  Y/Y

OUTFRONT Media’s first-quarter 2017 adjusted FFO per share of $0.28 came in line with the Zacks Consensus Estimate. The figure, however, came lower than the year-ago quarter figure of $0.34. Results reflected a weakness in national advertising market, mainly in the automotive category.

Revenues for the quarter came in at $330.6 million, marginally above the Zacks Consensus Estimate of $330.3 million. However, revenues declined 5.1% from the year-ago figure of $348.4 million.

Quarter in Detail

Billboard revenues of $236 million in the quarter declined 5.8% year over year. Results reflect disposition of the company's outdoor advertising business in Latin America, decline in average revenue per display (yield) mainly from a reduction in U.S. national advertising, the net effect of new and lost billboards in the period, and dismal performance in Canada. However, the negatives were partly offset by increased proceeds from condemnations and the conversion of static billboards to digital.

Transit and other revenues also decreased 3.5% from the prior-year quarter to $94.6 million. The decline was due to reduction in U.S. national advertising revenues and disposition of outdoor business in Latin America, partly mitigated by the net effect of won and lost franchises.

Operating expenses of $191.9 million contracted 4% year over year, mainly due to the disposition of Latin America business. However, it was partly offset by elevated expenses related to the company’s sports marketing operating segment.

Operating income during the reported quarter was $26 million, reflecting an increase of 7.4% from the year-ago quarter. Adjusted operating income before depreciation and amortization declined 9% year over year to $80.2 million.

Net cash flow resulting from operating activities for the three-month period ending Mar 31, 2017 came in at $32.2 million, down from $33.8 million recorded in the comparable period last year.

As of Mar 31, 2017, Outfront Media’s liquidity position comprised cash of $26.3 million, as well as $398.3 million of availability under its $430 million revolving credit facility, net of $31.7 million of issued letters of credit against the revolving credit facility.  

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

OUTFRONT Media Inc. Price and Consensus

 

VGM Scores

At this time, the stock has a subpar Growth Score of 'D', however its Momentum is lagging a lot better with a 'F'. Following the exact same course, the stock was allocated also a grade of 'B' 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.

Zacks' style scores indicate that the company's stock is solely suitable for value investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift.  It's no surprise that the stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.


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