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Lamar Advertising (LAMR) Q3 FFO & Revenues Beat Estimates

Lamar Advertising Co. LAMR reported third-quarter 2017 adjusted funds from operations (FFO) of $1.40 per share, comfortably surpassing the Zacks Consensus Estimate of $1.32. Also, the figure came in higher than the year-ago tally of $1.37.

Net revenues for the reported quarter increased 3.1% year over year to $399.3 million. In addition, the top line surpassed the Zacks Consensus Estimate of $393 million.

Results reflected year-over-year rise in operating income, adjusted EBITDA and cash flow from operating activities.

Lamar Advertising Company Price, Consensus and EPS Surprise
 

Note: The EPS numbers presented in the above chart represent funds from operations (FFO) per share.

Quarter in Detail

Operating income increased to $131.7 million from $119.8 million recorded in the prior-year period. Adjusted earnings before interest, taxes, depreciation and amortization rose 3.3% year over year to $182.8 million. Additionally, free cash flow was up 5.4% year over year to $122.2 million.

At the third-quarter end, Lamar had total liquidity of $376.3 million, of which $346.9 million was available under its revolving senior credit facility, and $29.4 million in cash and cash equivalents.

The company closed 13 acquisition transactions during the quarter for total purchase consideration of $91.8 million.

Our Take

Lamar’s efforts to upgrade its portfolio and increase occupancy in the company’s existing advertising displays prove conducive to its top-line growth. These efforts also help raise advertising rates. In fact, the company holds significant market share in the U.S. outdoor advertising business, which is encouraging.

In August, the company announced the acquisition of assets from Steen Outdoor Advertising, in a bid to expand its footprint and add high-quality assets in its portfolio. These assets include around 460 billboards, and are mainly located in and around Philadelphia.

Outdoor advertising is a low-cost and wide-reaching medium. Therefore, the company is expanding its footprint to tap growth opportunities. This positions the company for long-term growth.

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

The stock has gained 11.4% year to date, underperforming 3.6% growth recorded by the industry it belongs to.

Performance of Other REITs

Ventas, Inc. VTR reported third-quarter 2017 normalized FFO of $1.04 per share, in line with the Zacks Consensus Estimate. The figure also came in a penny higher than the year-ago quarter tally. Results reflected improved property performance and accretive investments.

Cousins Properties Incorporated CUZ reported third-quarter 2017 FFO per share of 15 cents, in line with the Zacks Consensus Estimate. The quarter witnessed considerable improvement in rental property revenues, which aided results to quite an extent. However, elevated expenses were a headwind.

PS Business Parks, Inc. PSB reported third-quarter 2017 core FFO of $1.54 per share, surpassing the Zacks Consensus Estimate by a penny. Also, the figure came in 7.7% higher than $1.43 recorded in the prior-year quarter. The rise stemmed from higher net operating income (NOI), reduced general and administrative expenses, and savings from lower preferred distributions.

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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Lamar Advertising Company (LAMR): Free Stock Analysis Report
 
Ventas, Inc. (VTR): Free Stock Analysis Report
 
Cousins Properties Incorporated (CUZ): Free Stock Analysis Report
 
PS Business Parks, Inc. (PSB): Free Stock Analysis Report
 
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