Lamar Advertising (LAMR)

[investora2z]

The stock seems to be stable, and is looking to make an attempt to cross hurdles. The volumes are not too high, but there is no reason to be too negative on the stock in the short term. The recent earnings were better than expected with 6.5% growth in revenues and 53% rise in net income. The conservative forecast for the third quarter dampened the sentiments a bit, and the reaction to the good earnings was not too positive. In any case, the stock has done well over the last one year. It has appreciated by around 34% despite a 8% correction from the 52 week high made in May. It can resume the uptrend, but may need some positive news flow to get things going. It continues to acquire smaller billboard companies, including substantial acquisitions in California and the Southwest. The "in-fill" acquisitions, totaling $24 million include local companies like Empire Outdoor which owns hundreds of billboards. Its efforts to convert into an REIT may take a bit of time as the IRS is reviewing its policy on the matter. The conversion will help the investors more if the fundamentals continue to improve. The current valuations are high if seen in isolation, as the trailing P/E is 122 and the forward P/E is 47. However, the low PEG of 0.66 indicates expectation of growth in earnings over the next few years. The competition is fragmented, with direct competition from companies like Clear Channel Outdoors (CCO) and other segments like online advertising. Social media sponsorship / native advertising is gaining popularity. IZEA (IZEA), a company operating in this space, reported results of a survey which showed increasing preference of advertisers for using celebrity influence. Lamar is a strong brand, and is likely to do well provided it remains dynamic to take on the competition.