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Why Is Outfront Media (OUT) Up 4.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for Outfront Media (OUT). Shares have added about 4.2% in that time frame, outperforming the S&P 500.

Will the recent positive 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's Q4 FFO Beat Estimates, Revenues Up Y/Y

OUTFRONT Media reported fourth-quarter 2018 FFO per share of 68.8 cents, marginally surpassing the Zacks Consensus Estimate of 67 cents. Further, the figure came in higher than the year-ago tally of 54.3 cents.

The company witnessed growth in billboard and transit revenues in its U.S. Media segment. However, operating expenses flared up on a year-over-year basis.

Revenues in the reported quarter came in at $452.4 million, improving 12.7% from the year-ago figure.

Quarter in Detail

Billboard revenues of $302.1 million in the quarter under review indicate a year-over-year increase of 9.3%.

Transit and other revenues of $150.3 million were up 20.3% from the prior-year quarter. The upside resulted from improvement in yield as well as the net effect of won and lost franchises during the quarter.

However, operating expenses of $235.5 million increased 8.3% year over year, primarily on account of higher transit franchise expenses related to the addition of the Bay Area Rapid Transit franchise agreement, escalating posting, maintenance and other expenses, and billboard lease expense.

Operating income improved 30% year over year to $91.3 million.

Net cash flow, resulting from operating activities for the year ending Dec 31, 2018, came in at $214.3 million, down from the $249.3 million recorded in the comparable period last year. Results were affected primarily due to pre-paid equipment deployment costs under the MTA agreement.

As of Dec 31, 2018, OUTFRONT Media’s liquidity position comprised unrestricted cash of $52.7 million and $364 million of availability under its $430 million revolving credit facility, net of $66 million of issued letters of credit.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -25.68% due to these changes.

VGM Scores

At this time, Outfront Media has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Outfront Media has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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