Outfront Media (OUT) Down 55.2% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Outfront Media (OUT). Shares have lost about 55.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Outfront Media 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.

OUTFRONT Media Q4 FFO and Revenues Beat Estimates

OUTFRONT Media reported fourth-quarter 2019 adjusted FFO per share of 73 cents, surpassing the Zacks Consensus Estimate of 72 cents. Moreover, the reported figure improved from the prior-year quarter tally of 70 cents.

Revenues came in at $488.1 million for the fourth quarter, beating the Zacks Consensus Estimate of $482.6 million by 1.1%. The revenue figure also climbed 7.9% year over year.

Results highlight higher average revenue per display, increased revenues from digital-billboard conversions and digital transit displays. Also, the adjusted operating income before depreciation and amortization (adjusted OIBDA) was up 5.5% year over year. Nonetheless, mounting transit franchise cost and billboard lease expenses hurt results to some extent.

For full-year 2019, the company reported adjusted FFO per share of $2.33, marking an increase of 8.4% year on year. Full-year revenues came in at $1.8 billion, reflecting an 11% increase from the prior year.

Quarter in Detail

Billboard revenues came in at $321.1 million, indicating year-over-year increase of 6.3%. This upside resulted from higher average revenue per display, which is referred as yield, and increased revenues from digital-billboard conversions.

Transit and other revenues of $167 million were up 11.1%, year on year. Growth in revenues from digital transit displays and improvement in yield resulted in this upswing.

However, operating expenses of $255.9 million flared up 8.7% year over year. This upsurge mainly resulted from elevated transit franchise expenses and higher billboard lease expense.

Nevertheless, operating income improved 7.3% to $98 million in the reported quarter on solid revenues.

Balance Sheet

Net cash flow, resulting from operating activities for the year ended Dec 31, 2019, came in at $276.9 million, up 29.2% year on year. Results primarily reflect the impact of higher net income. However, this was partly offset by higher pre-paid equipment deployment costs associated with its New York Metropolitan Transportation Authority transit franchise.

As of Dec 31, 2019, OUTFRONT Media enjoyed a solid liquidity position, which comprised unrestricted cash of $59.1 million and $498.4 million of availability under its $500-million revolving credit facility, net of $1.6 million of issued letters of credit.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, Outfront Media has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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

Outfront Media has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.