We recently maintained a Neutral recommendation on
Lamar Advertising Company
), a leading owner and operator of outdoor advertising structures
in the U.S.
CLEAR CHANL OUT (CCO): Free Stock Analysis
LAMAR ADVER CO (LAMR): Free Stock Analysis
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Lamar has developed its localized billboard advertising businesses
through a combination of organic growth and strategic acquisitions.
As of August 8, 2012, the company had 1,564 digital displays
including 852 bulletins and 712 posters.
Internal and external investments have been the company's primary
tool all along to capture a considerable share of localized outdoor
advertising markets. The company invested roughly $107 million in
2011 and $29.8 million in the second quarter 2012 to improve its
existing displays and construct new advertising structures.
Lamar recently came out with its second quarter 2012 results and
reported earnings per share of 15 cents; in line with the Zacks
Consensus Estimate and an improvement over earnings of 12 cents
reported in the year-ago comparable quarter.
Top line grew 3.9% year over year to $305 million, slightly above
the company's guidance of $303 million. Organic revenue growth was
3.6% in the quarter as compared with 3% projected by management.
We expect upsides going forward, as the company builds its national
sales presence and establishes relationships with larger and
national advertisers. All these positive factors notwithstanding,
difficulties in obtaining loans, higher payroll and site lease
expenses can be challenging for small and midsized businesses which
in turn restrict their advertisement spending, limiting growth
opportunities for companies like Lamar.
Moreover, enhanced capital expenditure and intensifying competition
from peers like
Clear Channel Outdoor Holdings Inc.
) keep us on the sidelines for Lamar.
The current Zacks Consensus Estimate for earnings per share for the
third quarter of 2012 is 15 cents per share, which reflects a
year-over-year growth of 263.6%. Estimates for 2012 and 2013 are 15
cents and 58 cents, representing annual growth of 640.9% and