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Lamar (LAMR) Up 1.5% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

It has been about a month since the last earnings report for Lamar Advertising (LAMR). Shares have added about 1.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Lamar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Lamar Advertising’s Q3 FFO & Revenues Beat Estimates

Lamar reported third-quarter 2019 adjusted 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 reflected 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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, Lamar has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions has been net zero. It comes with little surprise Lamar has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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