OUTFRONT Media Inc. OUT recently announced the acquisition of billboard assets in Chicago, IL. The move comes as part of the company’s strategy to boost its presence in key regions. Specifically, it has acquired 22 large-format static billboards and 16 digital displays from Total Outdoor.
The latest buyout is expected to drive the company’s top-line growth. This is because Chicago is the third largest Designated Market Areas (DMAs) in the United States and the acquired assets are positioned in high-profile areas and denote the only large format inside the Loop. Notably, the Loop happens to be the central business district in the downtown area of the city. Thus, demand for such assets from tenants is likely to shoot up.
Notably, OUTFRONT Media’s advertising sites are geographically diversified, with presence in all of the 25 largest markets in the United States, and 150 markets across the nation as well as Canada. The large scale presence enables its clients to reach out to a national audience. It also provides the flexibility to tailor campaigns for specific regions or markets. Moreover, over the past three years, the company has witnessed 100% retention of the top 10 customers and 79% of the top 1000.
The company is focused on increasing its digital-display assets at prime locations and in sync with this, has resorted to acquisitions, expansions and conversions of static billboard displays to digital, which bode well for long-term growth. Moreover, with the expansion of footprint and reaching of technology platform to marketers, it is capitalizing on out-of-home (OOH) advertising’s growth potential.
OUTFRONT Media currently carries a Zacks Rank #2 (Buy). In the year-to-date period, shares of the company have outperformed the industry. While the stock has gained 52.4%, the industry has rallied 25% during this period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Key Picks
Investors can also consider some similar-ranked stocks from the real estate space like Alexandria Real Estate Equities, Inc. ARE, Equity Residential EQR and Mid-America Apartment Communities, Inc. MAA.
Alexandria Real Estate’s Zacks Consensus Estimate for 2019 funds from operations (FFO) per share has moved marginally north to $6.98 in the past three months.
Equity Residential’s FFO per share estimate for the current year moved up 0.3% to $3.45 over the past month.
Mid-America’s Zacks Consensus Estimate for the ongoing year’s FFO per share climbed marginally to $6.30 in a month’s time.
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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