HomeMost PopularInvesting Grab Your Pickaxe: OUTFRONT Media (OUT) is the New Gold...

Grab Your Pickaxe: OUTFRONT Media (OUT) is the New Gold Rush!

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OUTFRONT Media OUT appears ready to strike gold with its diversified portfolio of advertising sites across the United States and Canada, with a strategic focus on expanding its digital-billboard lineup. However, the company faces stiff competition from other advertising channels and is grappling with elevated expenses and a high-interest rate environment.

Why OUTFRONT Media is a Gem?

With advertising sites spread across the United States and Canada, OUTFRONT Media offers clients nationwide reach as well as the flexibility to localize campaigns. The company’s diversified industry-wise portfolio provides stability in its revenues. Looking ahead, estimates predict an increase of 2.4% and 2.9% in total revenues for 2023 and 2024, respectively.

Additionally, OUTFRONT Media has been making strategic investments in expanding its digital billboard portfolio, resulting in a total of 2,105 digital billboard displays by the end of the third quarter of 2023. The switch from traditional static billboard advertising to digital displays has also opened up new advertising relationships, presenting significant potential for digital revenue growth.
Moving forward, the company’s recent acquisitions, totaling around $30.7 million in the nine months ended Sep 30, 2023, and $353.9 million in 2022, position it for sustained long-term growth.

Furthermore, spurred by technological advancements and the cost-effectiveness of out-of-home (OOH) advertising, OUTFRONT Media is well-positioned to capitalize on the rapid growth of this sector. Anticipated higher technology investments in the coming years are expected to further bolster the company’s OOH advertising efforts.

Over the last three months, OUTFRONT Media’s stock has surged 20.9%, outperforming the industry’s growth of 3.9%.

What’s Chipping Away at OUTFRONT Media’s Shine?

Despite its strengths, OUTFRONT Media faces competition from other outdoor advertisers and various other media platforms, which could impact the company’s pricing power and overall profitability. Moreover, the company is grappling with escalating expenses amid the current macroeconomic environment, with total operating expenses expected to increase by 7% year over year. Furthermore, the high interest rate environment is likely to weigh on OUTFRONT Media’s ability to acquire or develop real estate, with net interest expenses expected to rise by 21.3% in 2023.

A Golden Opportunity for Investors

While these challenges are evident, there are other shining stars in the REIT sector to consider, such as Lamar Advertising LAMR, EastGroup Properties EGP, and Stag Industrial STAG, each currently carrying a Zacks Rank #2 (Buy). Lamar Advertising’s FFO per share estimate has been raised by 1.7% over the past two months, while EastGroup Properties’ 2023 FFO per share has witnessed a slight incremental uptick in the same period. Stag Industrial’s ongoing year’s FFO per share estimate has also been nudged up by 1.3% over the past two months.

It’s important to note that anything related to earnings in this commentary represents funds from operations (FFO), a widely-used metric to evaluate the performance of REITs.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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