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Here's Why It Is Wise to Hold Lamar Advertising Stock Now
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Lamar Advertising Company’s (LAMR - Free Report) efforts to upgrade its traditional static billboards to digital ones will likely support its growth over the long run. The company enjoys an impressive national footprint and holds a leading position as a provider of logo signs in the United States. However, the adverse impact of the coronavirus outbreak remains a concern.
Lamar Advertising recently withdrew its 2020 guidance and announced the board’s re-evaluation of dividend policy and detailed liquidity measures. The company had earlier projected 2020 adjusted funds from operations (FFO) per share of $6.05-$6.20, suggesting 4.3-7% year-over-year growth.
Nevertheless, Lamar Advertising enjoys a diversified tenant base, comprising restaurants, services, retailers and healthcare companies. Apart from this, it sources a significant part of its revenues from local businesses, with a diversified tenant base of tenants.
The company ended 2019 with 3,542 digital faces in the air, reflecting an increase of roughly 335 faces for the year. Notably, 205 of those were new-builds and 130 were by acquisition. Such expansion efforts augur well for its long-term growth.
The company used its $750-million revolving credit facility and drew down $535 million from it in March, giving it liquidity and financial headroom, addressing the liquidity situation in light of the current uncertainty. Consequently, the company had about $490 million in cash in hand after the payment of its first-quarter dividend and the drawdown. It has no scheduled amortization in 2020, while its remaining debt outstanding is interest only. Moreover, its next maturity is the $175-million accounts receivable securitization due December 2021.
However, the company’s efforts to contain the spread of coronavirus are affecting the broader economy, forcing many businesses to curtail their advertising expenses with customers staying at homes rather than shopping or dining outside. This is likely to affect Lamar Advertising, with the company’s top-line growth expected to be limited.
Moreover, continued acquisitions of outdoor advertising assets and portfolio upgradation will likely impact free cash flows. Apart from this, intensifying competition might affect its pricing power.
Shares of this Zacks Rank #3 (Hold) company have declined 39.5% compared with the industry's fall of 7.2% over the past 12 months.
Plymouth Industrial REIT’s (PLYM - Free Report) Zacks Consensus Estimate for 2020 FFO per share moved up about 1.5% to $2.07 over the past month. The stock currently carriesa Zacks Rank of 1.
SBA Communications Corporation’s (SBAC - Free Report) FFO per share estimate for the ongoing year moved 1.41% north to $9.37 over the past two months. The stock currently carries a Zacks Rank #2 (Buy).
Gladstone Land Corp’s (LAND - Free Report) FFO per share estimate for the current year moved 3.33% north to $0.62 over the past month. The stock currently carries a Zacks Rank of 2.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Here's Why It Is Wise to Hold Lamar Advertising Stock Now
Lamar Advertising Company’s (LAMR - Free Report) efforts to upgrade its traditional static billboards to digital ones will likely support its growth over the long run. The company enjoys an impressive national footprint and holds a leading position as a provider of logo signs in the United States. However, the adverse impact of the coronavirus outbreak remains a concern.
Lamar Advertising recently withdrew its 2020 guidance and announced the board’s re-evaluation of dividend policy and detailed liquidity measures. The company had earlier projected 2020 adjusted funds from operations (FFO) per share of $6.05-$6.20, suggesting 4.3-7% year-over-year growth.
Nevertheless, Lamar Advertising enjoys a diversified tenant base, comprising restaurants, services, retailers and healthcare companies. Apart from this, it sources a significant part of its revenues from local businesses, with a diversified tenant base of tenants.
The company ended 2019 with 3,542 digital faces in the air, reflecting an increase of roughly 335 faces for the year. Notably, 205 of those were new-builds and 130 were by acquisition. Such expansion efforts augur well for its long-term growth.
The company used its $750-million revolving credit facility and drew down $535 million from it in March, giving it liquidity and financial headroom, addressing the liquidity situation in light of the current uncertainty. Consequently, the company had about $490 million in cash in hand after the payment of its first-quarter dividend and the drawdown. It has no scheduled amortization in 2020, while its remaining debt outstanding is interest only. Moreover, its next maturity is the $175-million accounts receivable securitization due December 2021.
However, the company’s efforts to contain the spread of coronavirus are affecting the broader economy, forcing many businesses to curtail their advertising expenses with customers staying at homes rather than shopping or dining outside. This is likely to affect Lamar Advertising, with the company’s top-line growth expected to be limited.
Moreover, continued acquisitions of outdoor advertising assets and portfolio upgradation will likely impact free cash flows. Apart from this, intensifying competition might affect its pricing power.
Shares of this Zacks Rank #3 (Hold) company have declined 39.5% compared with the industry's fall of 7.2% over the past 12 months.
The Zacks Consensus Estimate for 2020 FFO per share has been revised 16.7% downward over the past 30 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Plymouth Industrial REIT’s (PLYM - Free Report) Zacks Consensus Estimate for 2020 FFO per share moved up about 1.5% to $2.07 over the past month. The stock currently carriesa Zacks Rank of 1.
SBA Communications Corporation’s (SBAC - Free Report) FFO per share estimate for the ongoing year moved 1.41% north to $9.37 over the past two months. The stock currently carries a Zacks Rank #2 (Buy).
Gladstone Land Corp’s (LAND - Free Report) FFO per share estimate for the current year moved 3.33% north to $0.62 over the past month. The stock currently carries a Zacks Rank of 2.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>