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A month has gone by since the last earnings report for Lamar Advertising (LAMR). Shares have added about 9.8% 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 its most recent earnings report in order to get a better handle on the important drivers.
Lamar's Q3 FFO & Revenues Surpass Estimates
Lamar’s quarterly adjusted FFO per share of $1.32 outpaced the Zacks Consensus Estimate of $1.18. Moreover, net revenues for the quarter came in at $386.1 million, surpassing the Zacks Consensus Estimate of $375.4 million.
Per management, the company witnessed a recovery in advertising revenues backed by “spending from local businesses and election-year political dollars”.
Also, the company’s quarterly results benefited from a fall in operating expenses. Further, the company revised its adjusted FFO guidance upward for the current year on recovery in sales and improved expense management.
However, on a year-over-year basis, net revenues for the quarter declined 15.7%. In addition, the reported FFO figure is lower than the prior-year quarter’s $1.62.
Quarter in Detail
Acquisition-adjusted net revenues for the third quarter decreased 15.5% year on year to $386.1 million. Also, acquisition-adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell 20.1% to $170.7 million.
Operating income slid 25.2% from the prior-year quarter to $105.9 million. Additionally, free cash flow of $127.2 million dipped 8% year over year in the September-end quarter.
However, operating expenses declined 11.4% from the prior-year quarter to $280.3 million.
At the end of third-quarter 2020, Lamar Advertising had total liquidity of $770.8 million. This comprised $666.9 million available for borrowing under its revolving senior credit facility, $35.3 million available under the Accounts Receivable Securitization Program, and $68.6 million in cash and cash equivalents.
Lamar Advertising has revised the 2020 guidance. It now projects 2020 adjusted FFO per share at $4.65-$4.85. The company had earlier estimated the ongoing year’s adjusted FFO per share in the $4.16-$4.56 band.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
Currently, Lamar has a subpar Growth Score of D, though it is lagging a bit 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.
Lamar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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