There has been improvement in fundamentals over the years, and the stock has moved accordingly. In 2011 & 2012 it reported profits, and there are expectations that it may report an EPS of $0.52 for the full fiscal 2013. The stock has appreciated by more than 75% over the last two years. Last earnings were below analyst estimates, and hence the stock corrected sharply from the 52 week high, but it has stabilized a bit after that. The loss had declined sharply from $22.8 million to $6 million on a yoy basis. Valuations are a bit stretched because the ttm EPS is $0.28, but the forward P/E is 47 (fye. 2014). The PEG ratio is 0.68 which indicates that there are expectations good earnings growth over the next five years. The debt of $2.15 billion is a matter of worry, and the revenue growth is also going to be difficult. There are challenges from companies like Clear Channel Outdoors (CCO), and new forms of media are becoming increasingly popular. Social media is a preferred channel for advertising, and concepts like social media sponsorship are gaining in importance. IZEA (IZEA) is a company in the social media sponsorship space which runs a marketplace wherein advertisers can pay celebrities and other influencers to blog, pin, tweet, YouTube, Instagram, etc. There are other forms of advertising which may yield better results. However, outdoor advertising, especially with digital billboards is likely to remain relevant and will keep growing. Lamar is also increasing the number of the digital billboards to adapt to the change. If Lamar can improve the margins over the next few quarters, then the outlook can become much better. Even the conversion to REIT will be beneficial for shareholders if the profits increase. Slippages will not be taken too kindly as the stock has already appreciated a lot.
