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Outfront Media Inc.’s OUT advertising sites are geographically diversified, with presence in 150 markets in the United States and Canada. The large scale presence enables its clients to reach a national audience and also provides flexibility to tailor campaigns for specific regions or markets. However, the dent in advertising values due to the coronavirus pandemic is now a concern.
The out-of-home (OOH) advertising industry has witnessed rapid growth in recent years. Moreover, in the upcoming years, higher technology investments are expected to provide further support to the industry. Therefore, OUTFRONT Media has also been expanding its footprint and providing a unique technology platform to drive demand for its spaces in order to tap growth opportunities.
Further, the company is making efforts to shift its business from traditional static-billboard advertising to digital displays. The company increasing investments in its digital-billboard portfolio over the years will likely drive its long-term growth. The U.S digital billboard count increased to 1,162 as of Mar 31, 2020, from 957 at the end of 2018.
However, the coronavirus pandemic has hit outdoor travel. There has been a dent in advertising values, which is likely to hurt the company’s operations and revenue growth in the near term.
Moreover, OUTFRONT Media’s debt position is a concern. The company’s total debt to total capital of 80.6% deteriorated sequentially. Also, the coronavirus-induced slowdown will impede revenue growth and affect cash flow from operations.
Additionally, the trend in estimate revisions of 2020 FFO per share does not indicate a favorable outlook as the estimate moved 46.5% south over the past 60 days.
In addition, this Zacks Rank #3 (Hold) company has underperformed its industry over the past year. Shares of OUTFRONT Media have depreciated 40.3%, while the industry has lost 7.2% during this period.
Stocks to Consider
Alexander & Baldwin, Inc.’s ALEX funds from operations (FFO) per share estimate for 2020 moved up from 22 cents to 83 cents over the past two months. The stock currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
City Office REIT, Inc.’s CIO Zacks Consensus Estimate for the ongoing-year FFO per share moved 13.3% north to $1.11 over the past two months. The stock currently flaunts a Zacks Rank of 1.
Gladstone Land Corporation’s LAND Zacks Consensus Estimate for the current year’s FFO per share moved 9.7% north to 68 cents over the past two months. The stock currently carries a Zacks Rank of 2 (Buy).
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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Alexander Baldwin Holdings, Inc. (ALEX) : Free Stock Analysis Report
Gladstone Land Corporation (LAND) : Free Stock Analysis Report
OUTFRONT Media Inc. (OUT) : Free Stock Analysis Report
City Office REIT, Inc. (CIO) : Free Stock Analysis Report
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