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How Has OUT Performed 30 Days Post Earnings

Zacks Equity Research

A month has gone by since the last earnings report for Outfront Media (OUT). Shares were flat in that time frame, underperforming the S&P 500.

Will the recent trend continue leading up to its next earnings release, or is Outfront Media 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.

OUTFRONT Media Q3 FFO Lags, Revenues Beat Estimates

OUTFRONT Media reported third-quarter 2019 adjusted FFO per share of 64 cents, which missed the Zacks Consensus Estimate of 65 cents. However, the reported figure improved year over year.

Solid top-line growth in national and local advertising in the United States aided the company’s performance. Also, the adjusted operating income before depreciation and amortization (adjusted OIBDA) was up 8.5% year over year. Nonetheless, mounting transit franchise cost and billboard lease expenses hurt results to some extent.

Revenues came in at $462.5 million, beating the Zacks Consensus Estimate of $460.6 million. The revenue figure also climbed 11.7% year over year.

Quarter in Detail

Billboard revenues came in at $312 million, indicating year-over-year increase of 7.4%. This upside resulted from higher average revenue per display, which is referred as yield, and increased revenues from digital-billboard conversions.

Transit and other revenues of $150.5 million were up 21.8%, year over year. Growth in revenues from digital displays, improvement in yield, rise in third-party digital equipment sales and the net impact of won and lost franchises during the third quarter resulted in this upswing.

However, operating expenses of $245.5 million flared up 14% year over year. This upsurge mainly resulted from elevated transit franchise expenses, higher billboard lease expense and escalation of posting, maintenance and other expenses.

Nevertheless, operating income improved 8.4% to $85.5 million in the reported quarter backed by solid revenues, from the $78.9 million reported in the prior-year quarter.

Net cash flow, resulting from operating activities for the nine-month period ended Sep 30, 2019, came in at $162.1 million, up 18% year on year. Results primarily reflect the impact of higher net income. However, the reported tally was partly offset by higher pre-paid equipment deployment costs associated with the company's transit franchise agreement with New York Metropolitan Transportation Authority.

As of Sep 30, 2019, OUTFRONT Media enjoyed a solid  liquidity position, which comprised unrestricted cash of $58.3 million and $413 million of availability under its $430-million revolving credit facility, net of $2 million of issued letters of credit.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Outfront Media has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Outfront Media has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.



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