Lamar Advertising Co. – Value Analysis (NASDAQ:LAMR) : December 26, 2017

Capitalcube gives Lamar Advertising Co. a score of 75.

Our analysis is based on comparing Lamar Advertising Co. with the following peers – Interpublic Group of Companies, Inc., National CineMedia, Inc., Clear Channel Outdoor Holdings, Inc. Class A, Omnicom Group Inc, AirMedia Group, Inc. Sponsored ADR and OUTFRONT Media Inc. (IPG-US, NCMI-US, CCO-US, OMC-US, AMCN-US and OUT-US).

Investment Outlook

Lamar Advertising Co. has a fundamental score of 75 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • With respect to peers, relative outperformance over the last year is in contrast to the more recent underperformance.
  • It currently trades at a Price/Book ratio of (5.69).
  • The market expects LAMR-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • LAMR-US has relatively high profit margins while operating with median asset turns.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • LAMR-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • While LAMR-US‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • LAMR-US does not seem to have the flexibility to raise more debt.

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Leverage & Liquidity

LAMR-US does not seem able to raise more debt easily.

  • LAMR-US‘s debt at 26.50% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 26.50%), and interest coverage level of 3.50x, would make major new borrowings difficult.
  • Of the 6 chosen peers for the company, only 5 of the stocks have an outstanding debt balance. Companies with no debt include AMCN-US.

LAMR-US has maintained its relatively high liquidity profile from the recent year-end.

  • LAMR-US‘s interest coverage is greater than (but within one standard deviation of) its five-year average interest coverage of 2.52x.
  • Compared to 2016, interest coverage has remained relatively stable for both the company (3.50x) and the peer median (2.96x).
  • LAMR-US‘s debt-EV is less than (but within one standard deviation of) its five-year average debt-EV of 28.90%.
  • Like the interest coverage trend, debt-EV has remained relatively stable for both the company (26.50%) and the peer median (26.50%).

Access the detailed analysis for Lamar Advertising Co.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Interpublic Group of Companies, Inc. 21.55 0.93 10.71 50.01
National CineMedia, Inc. 53.37 1.76 2.42 17.59
Clear Channel Outdoor Holdings, Inc. Class A 76.44 1.47 0.63 3.6
Omnicom Group Inc 23.76 0.9 9.74 33.86
AirMedia Group, Inc. Sponsored ADR 0 2.28 0 999
OUTFRONT Media Inc. 38.82 N/A 0.96 13.27
Lamar Advertising Company Class A 26.5 1.55 3.5 22.28
Peer Median 26.5 1.51 2.96 22.28
Best In Class 21.55 2.28 10.71 999

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Company Profile

Lamar Advertising Co. engages in advertising services. The firm leases space for advertising on billboards, buses, shelters, benches, logo plates and in airport terminals. It operates through the following advertising displays: billboards, logo signs, and transit advertising displays. The company was founded in 1902 and is headquartered in Baton Rouge, LA.

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