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OUTFRONT Media (OUT) Stock Up on Q1 FFO Beat, Revenues Up

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OUTFRONT Media, Inc. (OUT - Free Report) reported first-quarter 2019 funds from operations (FFO) per share of 28 cents, marginally surpassing the Zacks Consensus Estimate of 27 cents. Further, the figure improves from the year-ago tally of 27 cents.

The company witnessed growth in billboard and transit revenues in its U.S. Media segment. Adjusted OIBDA also improved year over year.

Revenues in the reported quarter came in at $371.7 million, comfortably beating the Zacks Consensus Estimate of $364.7 million. The top line also climbed 10.2% from the year-ago quarter’s reported figure.

Reflecting positive sentiments, shares of the company were marginally up during yesterday’s trading session.

Quarter in Detail

Billboard revenues of $251 million in the reported quarter indicate a year-over-year increase of 4.9%, driven by higher revenues from digital billboard conversions.

Transit and other revenues of $120.7 million were up 22.4% from the prior-year quarter’s reported figure. This upside stemmed from improvement in yield as well as the net effect of won and lost franchises during the first quarter.

Operating expenses of $216.9 million flared up 10% year over year, primarily owing to higher transit franchise expenses, the addition of San Francisco Bay Area Rapid Transit (BART) transit franchise agreement, escalating posting, maintenance and other expenses, and billboard lease expense.

Operating income improved 16.4% year over year to $36.9 million.

Net cash flow, resulting from operating activities for the quarter ending Mar 31, 2019, came in at $41.4 million, plunging 33.3% recorded in the comparable period last year. Results were affected primarily due to pre-paid equipment deployment costs under the MTA agreement.

As of Mar 31, 2019, OUTFRONT Media’s liquidity position comprised unrestricted cash of $52.7 million and $328.9 million of availability under its $430-million revolving credit facility, net of $66 .1 million of issued letters of credit.

Dividend Update

On Apr 26, OUTFRONT Media announced quarterly common stock dividend of 36 cents per share. The dividend will be paid on Jun 28, to shareholders of record as of Jun 7, 2019.

Our Take

OUTFRONT Media’s impressive performance in the March-end quarter was supported by solid local advertising and higher revenues from digital billboard conversions.

Understandably, the company has been fortifying its billboard portfolio through digital conversions and strategic acquisitions. Further, low-cost out-of-home (OOH) platform also augurs well.

OUTFRONT Media Inc. Price, Consensus and EPS Surprise
 

Currently, OUTFRONT Media carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

Cousins Properties Incorporated (CUZ - Free Report) reported FFO per share of 20 cents during the January-March quarter, in line with the Zacks Consensus Estimate. The figure came in higher than the prior-year quarter’s reported tally of 15 cents. 

Duke Realty Corporation’s first-quarter 2019 core FFO per share of 33 cents surpassed the Zacks Consensus Estimate of 32 cents. Moreover, the figure came in higher than the year-ago quarter’s reported tally of 30 cents.

Ventas, Inc. (VTR - Free Report) delivered first-quarter normalized FFO of 99 cents, beating the Zacks Consensus Estimate of 96 cents. The reported figure, however, came in lower than the prior year’s $1.05.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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