The earnings were better than expected as the company posted a net profit of $21.3 million or 22 cents per share in Q2'13 compared to $13.9 million or 15 cents per share in Q2'12, an increase of nearly 53%. The analyst average forecast by Thomson Reuters was for 21 cents per share. Revenue increased by 6.5% to $324.7 million in Q2'13 compared to $304.9 million in Q2'12. This was at the high end of Lamar's estimate of $322 million to $325 million. The operating margin increased slightly from 21.2% to 21.6%. The forecast for Q3'13 was not too robust as the company expects revenue between $320 million and $323 million. This was perhaps one of the reasons for a muted response to the otherwise good earnings. Sequentially, the revenue increased nearly 15% from $283.48 million in Q1'13. In Q1'13, the company had posted a net loss of $6.16 million or 7 cents per share. Cash was around $118 million as on June 30, and the debt was $2.15 billion. Current ratio remained below one. The stock is up nearly 33% on a 52 week basis, and is significantly up from its 52 week low of $31.33 made in September. However, it has corrected from the 52 week high of $49.61 made in May. The company continues to try for a conversion to REIT, though the IRS is likely to take more time to decide. IRS is reviewing its policy on the matter. The company faces competition from companies like Clear Channel Outdoors (CCO) and from other segments of the advertising market, especially online advertising. Social media sponsorship / native advertising is gaining popularity, and IZEA (IZEA), a company operating in this space, posted record numbers for Q2'13 recently. Lamar is an established player, but needs to remain flexible and aggressive to maintain its competitive advantage.
