Credit: Shutterstock photoSummary:
Recently, Lamar announced that it has merged with and into its wholly owned subsidiary, Lamar Advertising REIT Company, thereby accomplishing the ultimate stage in the reorganization of its business operations for qualifying as a real estate investment trust ("REIT"). We believe the company's REIT conversion move to capitalize on a seemingly more favorable tax environment is a strategic fit for long-term growth. Though the company's third-quarter 2014 earnings missed the Zacks Consensus Estimate by a penny, the figure came above the prior-year quarter earnings. This was attributable to a notable improvement in revenues and operating income. The company boasts an impressive national footprint and is a leading provider of logo signs in the U.S. It has a diversified tenant base and operates in a high-barriers-to-entry market due to permit restrictions. However, there exists headwinds on the national level, particularly, in terms of national ad spend. Also, issues surrounding interest rate remains a looming concern for REITs.
Overview:
Headquartered in Baton Rouge, LA, Lamar Advertising Company is one of the largest owners and operators of outdoor advertising structures in the U.S. It provides advertising services to restaurants, retailers, automotive, real estate, health care, gaming, service, hotel and motel, telecommunication, and amusement industries, including entertainment and sports.
Lamar has a single operating and reportable segment, namely advertising. The company offers three types of outdoor advertising displays: 1) billboards, 2) logo signs, and 3) transit advertising displays. Lamar sells advertising space on two types of billboards: bulletins and posters. Bulletins are generally large, illuminated advertising structures, and are typically located on major highways and target vehicular traffic spots. On the other hand, posters are relatively smaller than bulletins and are located on major traffic arteries, city streets, and targeted vehicular and pedestrian traffic spots. In addition to traditional billboards, Lamar also offers digital billboards, which are usually located on major traffic arteries and city streets. Logo signs are normally located near highway exits, nearby gas, food, camping, lodging and other attractions. Transit advertising displays are advertising spaces sold on the exterior and interior of public transportation vehicles, transit shelters and benches.
As of Nov 19, 2014, Lamar operates more than 150 outdoor advertising companies in 44 states of the U.S., Canada and Puerto Rico. In addition, the company has logo businesses in 23 states and the province of Ontario, Canada and more than 60 transit-advertising franchises in the U.S., Canada and Puerto Rico.
On Nov 19, 2014, Lamar announced that it has merged with and into its wholly owned subsidiary, Lamar Advertising REIT Company, thereby accomplishing the ultimate stage in the reorganization of its business operations for qualifying as a REIT.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
