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Outfront Media (OUT) Up 2% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Outfront Media (OUT - Free Report) . Shares have added about 2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Outfront Media due for a pullback? 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 catalysts.

OUTFRONT Media Beats Q3 FFO and Revenue Estimates

OUTFRONT Media reported third-quarter 2018 FFO per share of 60 cents, surpassing the Zacks Consensus Estimate by a whisker. Further, the figure came in higher than the year-ago tally of 56 cents.

Per management, the company witnessed robust growth in local-advertising revenues during the Sep-end quarter. In addition, digital transformations continue to drive top-line growth. However, operating expenses flared up on a year-over-year basis.

Revenues in the reported quarter came in at $414.2 million, comfortably surpassing the Zacks Consensus Estimate of $405.1 million. The top line also climbed 3.2% from the year-ago figure.

Quarter in Detail

Billboard revenues of $290.6 million in the quarter under review indicate a year-over-year increase of $18.2 million. Results primarily benefited from growth in revenues from the conversion of digital billboards and higher average revenues per display (yield) in U.S. Media. However, these were partially offset by lower proceeds from condemnations.

Transit and other revenues of $123.6 million were up $3.6 million from the prior-year quarter. The upside resulted from growth in digital transit displays and benefits from adopting new accounting standards in the Sports Marketing operating segment.

Operating expenses of $215.3 million inched up 1.3% year over year, mainly due to the impact of new accounting standards in the Sports Marketing operating segment resulting in elevated posting, maintenance and other expenses. This was partly muted by lower transit franchise expenses, relating to the company’s New York Metropolitan Transportation Authority (MTA) transit agreement.

Operating income edged down 1.7% year over year to $78.9 million.

Net cash flow, resulting from operating activities for the nine-month period ending Sep 30, 2018, came in at $137.4 million, down from $182.6 million recorded in the comparable period last year. Results were affected primarily due to prepaid equipment deployment costs under the MTA agreement.

As of Sep 30, 2018, OUTFRONT Media’s liquidity position comprised unrestricted cash of $56.7 million and $353.9 million of availability under its $430 revolving credit facility, net of $66.1 million of issued letters of credit. The company also has an unused $300 million in its at-the-market equity offering program.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 6.35% due to these changes.

VGM Scores

At this time, Outfront Media has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Outfront Media has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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