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Lamar Advertising Company LAMR enjoys an impressive national footprint and is one of the foremost provider of logo signs in the United States. The company’s diverse tenant base includes retailers, restaurants, services and health care companies. Apart from this, the company generates a significant part of its revenues from local businesses. This generally leads to less volatility in revenues.
Moreover, the company enjoys considerable market share in the U.S. outdoor advertising business, which is encouraging. The company has made concerted efforts to upgrade its portfolio over the recent years, increasing occupancy in its existing advertising displays. The company ended second-quarter 2020 with 3,610 digital units, denoting an increase of 68 units from the end of 2019.
However, the dent in advertising values due to the coronavirus pandemic is a pressing concern. Outdoor travel has taken a hit and subsequently the demand for the company’s services has also been affected. There is a reduction in customer advertising expenditures. The company’s second-quarter performance was significantly affected due to the same. Given the current choppiness in the economy and uncertainty about the reopening amid high infection rates, any notable turnaround is unlikely in the near term.
Also, the company’s high debt level is a headwind. The company’s total debt to total capital of 79.6% is high. Moreover, the coronavirus-induced slowdown will likely continue to impede revenue growth and affect cash flow from operations. In August, Moody’s downgraded the company’s long-term rating to B1 from Ba3 with a speculative grade as the rating agency believes that the outdoor advertising activities remain heavily dependent on consumer spending, which is expected to remain subdued for now.
Further, the Zacks Consensus Estimate for funds from operations (FFO) per share remained unchanged at $4.82 and $6.55 for 2020 and 2021, respectively, in the past month.
Also, shares of this Zacks Rank #3 (Hold) company have lost 20.7% so far this year compared with 4.4% decline recorded by the industry.
Stocks to Consider
Alpine Income Property Trust, Inc.’s PINE Zacks Consensus Estimate for the ongoing-year FFO per share moved 20.2% north to $1.19 in the past month. The stock currently carries a Zacks Rank of 2 (Buy).
Four Corners Property Trust, Inc.’s FCPT FFO per share estimate for 2020 moved up 2.9% to $1.43 in the last month. The stock currently carries a Zacks Rank of 2.
Duke Realty Corporation’s DRE Zacks Consensus Estimate for the current year’s FFO per share moved 2.8% north to $1.49 in a month’s time. The stock currently carries a Zacks Rank of 2.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Duke Realty Corporation (DRE) : Free Stock Analysis Report
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