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Lamar Advertising (LAMR) Stock Up on Q3 FFO & Revenues Beat

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Shares of Lamar Advertising Company LAMR gained 2.7%, during Tuesday's regular trading session, after the company reported a better-than-expected performance for third-quarter 2019.

The company reported adjusted funds from operations (FFO) per share of $1.62, surpassing the Zacks Consensus Estimate of $1.59. Moreover, net revenues for the quarter came in at $457.8 million, which also outpaced the Zacks consensus Estimate of $453.2 million.

The company’s impressive quarterly performance reflects solid top-line growth, aided by increase in both local and national advertising revenues. Further, adjusted FFO per share was up 7.3% and net revenues climbed 9.4%, on a year-over-year basis.

Acquisition-adjusted net revenues increased 3.4%, while acquisition-adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were up 5.6%. The company witnessed 3.1% increase in local revenues, and 6.9% growth in national/programmatic revenues. Moreover, same unit digital revenues went up 6.9%.

Quarter in Detail

Operating income improved 10.1% from the prior-year quarter to $141.4 million. Adjusted EBITDA went up 11.8%, year over year, to $215.2 million. Additionally, free cash flow of $138.2 million in the September-end quarter improved 5.7% year over year.

At the end of third-quarter 2019, Lamar had total liquidity of $345.4 million, of which $322.1 million was available for borrowing under its revolving senior credit facility, and around $23.3 million in cash and cash equivalents.

Our Take

Lamar put up an encouraging show during the July-September period. Demand for out-of-home (OOH) advertising is high and the company now expects to attain the higher end of its prior outlook of 2019 adjusted FFO per share.

Lamar’s robust national presence, diversified tenant base and valuable permits augur well for long-term growth. Further, it remains focused to strengthen its position in strategic markets through accretive acquisitions. In fact, the company is anticipated to witness improving revenues, supported by its digital deployment activities, in the upcoming period. Nonetheless, high investment expenditure for OOH advertising expansion might hamper its balance sheet.

Lamar Advertising Company Price, Consensus and EPS Surprise


Lamar Advertising Company Price, Consensus and EPS Surprise

Lamar Advertising Company price-consensus-eps-surprise-chart | Lamar Advertising Company Quote

Lamar currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

OUTFRONT Media OUT reported third-quarter 2019 adjusted FFO per share of 64 cents, missing the Zacks Consensus Estimate of 65 cents. However, the reported figure improved from the prior-year quarter tally of 61 cents. Solid top-line growth in national and local advertising in the United States aided the company’s performance. Also, the adjusted operating income before depreciation and amortization (adjusted OIBDA) was up 8.5% year over year.

Public Storage’s (PSA - Free Report) third-quarter core FFO per share of $2.73 improved 1.1% from the prior-year figure of $2.70. The reported figure, however, missed the Zacks Consensus Estimate by a penny. The company’s lower-than-expected FFO per share reflects the unfavorable impact of higher expenses in the quarter for its same-store facilities, resulting from elevated marketing expenses and property taxes.

Equity Residential EQR delivered third-quarter 2019 normalized FFO per share of 91 cents, which surpassed the Zacks Consensus Estimate of 88 cents. Moreover, normalized FFO per share figure came 9.6% higher than the 83 cents reported in the year-ago quarter. Results suggested improved same-store net operating income (NOI) and lease-up NOI, and other non-same-store NOI.

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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