Lamar (LAMR) Down 58.5% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Lamar Advertising (LAMR). Shares have lost about 58.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Lamar due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Lamar Q4 FFO & Revenues Grow Y/Y

Lamar reported adjusted FFO per share of $1.64, up 10.8% from the prior-year quarter’s $1.48. However, the figure missed the Zacks Consensus Estimate of $1.68.

The year-over-year improvement reflects healthy top-line growth, highlighting an increase in national/programmatic revenues and same-unit digital revenues.

Net revenues for the quarter were $462.7 million, marking an 8.1% increase from the prior-year quarter. The revenue figure, however, lagged the Zacks Consensus Estimate of $465 million.

For 2019, the company reported adjusted FFO per share of $5.80, up 5.5% from $5.50 in 2018. Net revenues for the year were $1.75 billion, reflecting 7.8% growth year over year.

Quarter in Detail

Acquisition-adjusted net revenues for the fourth quarter increased 2.7% year over year, while acquisition-adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) grew 4.7%. The company witnessed 7.7% growth in national/programmatic revenues. Moreover, same-unit digital revenues went up 4.6%.

Operating income improved 8.3% from the prior-year quarter to $141.4 million, while adjusted EBITDA went up 10.4% to $215.6 million. Additionally, free cash flow of $135.3 million in the December-end quarter improved 7.3% year over year.

At the end of fourth-quarter 2019, Lamar had total liquidity of $413.5 million, of which $387.3 million was available for borrowing under its revolving senior credit facility, and $26.2 million in cash and cash equivalents.

Outlook

Lamar Advertising projects 2020 adjusted FFO per share of $6.05-$6.20, suggesting 4.3-7% year-over-year growth.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted -7.08% due to these changes.

VGM Scores

Currently, Lamar has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Lamar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.