OUTFRONT Media OUT enjoys a diversified portfolio of advertising sites, geography and industry-wise, in some of the key markets of the United States. Its efforts to expand the out-of-home (OOH) advertising platform bode well for long-term growth. Strategic investments in the digital billboard portfolio are encouraging. However, fluctuations in advertising expenditures amid a slowdown in the economy are likely to hurt its top-line growth and operating results.
Analysts seem bullish on this REIT carrying a Zacks Rank #3 (Hold), with the Zacks Consensus Estimate for its 2024 funds from operations (FFO) per share being raised marginally northward over the past three months to $1.70.
Shares of the company have rallied 21.7%, outperforming the industry's 9.3% growth over the past three months.
Image Source: Zacks Investment Research
What’s Aiding OUTFRONT Media?
OUTFRONT Media’s advertising sites are geographically diversified, with a presence across the largest markets in the United States. The large-scale presence enables its clients to reach a national audience and also provides the flexibility to tailor campaigns to specific regions or markets. Such diversification ensures steady and stable revenues for OUT. We estimate a year-over-year increase of 1.2% in its total revenues for 2024.
OUTFRONT Media has been making efforts to convert its business from traditional static billboard advertising to digital displays, which are helping expand the number of new advertising relationships and providing scope to boost digital revenues.The company continues to target 150 to 200 total digital billboard additions for the full year. Such expansion efforts in new assets and technology are likely to drive the company’s revenue growth in the upcoming period. We estimate a year-over-year increase of nearly 1% in billboard revenues in 2024.
OUTFRONT Media has also capitalized on acquisitions to enhance its portfolio. In the first half of 2024, the company acquired several assets for approximately $7.6 million. With such expansion efforts, the company remains poised to grow over the long term.
In the upcoming years, higher technology investments are expected to provide support to OOH advertising. To tap growth opportunities, OUT is expanding its footprint and providing a unique technology platform to marketers such as data-analytic features to help draw more audiences. This will help advertisers channel their funds efficiently to OUT’s assets and is anticipated to serve as a major growth driver.
What’s Hurting OUTFRONT Media?
OUTFRONT Media’s revenues and operating results are sensitive to fluctuations in advertising expenditures and general economic conditions. Given the slowdown in the economy, we expect the top-line growth to be affected to some extent in the near term.
OUT faces competition from other outdoor advertisers for customers, display locations and structures. The company also competes with other media, including conventional platforms such as television, radio, print media, direct mail marketers and online, mobile and social media platforms. This is anticipated to affect the company’s pricing power in the market.
Stocks to Consider
Some better-ranked stocks to consider from the broader REIT sector are Crown Castle Inc. CCI and Iron Mountain IRM, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Crown Castle’s current-year FFO per share has been raised marginally over the past week to $6.98.
The Zacks Consensus Estimate for Iron Mountain’s current-year FFO per share has moved northward marginally over the past three months to $4.49.
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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OUTFRONT Media Inc. (OUT) : Free Stock Analysis Report
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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.
