Shares of OUTFRONT Media OUT have gained 32.6% in the past six months, outperforming its industry’s growth of 8.1%.
This New York-based advertising real estate investment trust’s (REIT) diverse portfolio of advertising sites and large-scale presence, digital billboard conversions and strategic acquisitions over the years have enabled it to ride the growth curve so far.
Analysts seem positive about this Zacks Rank #3 (Hold) company. The Zacks Consensus Estimate for its 2024 FFO per share has been revised 1.8% upward over the past two months to $1.73.
Image Source: Zacks Investment Research
Let us now find out the possible factors behind the surge in the stock price.
OUT’s Large-Scale Presence
OUTFRONT Media enjoys a geographically diverse portfolio of advertising sites with a presence across the largest markets in the United States. The company’s large-scale presence paves the way for its clients to reach a national audience and provides the flexibility to tailor campaigns to specific regions or markets. This OOH advertising company offers communication and advertising services to several transit authorities.
The company caters to various industries, including professional services, healthcare/pharmaceuticals and retail. Hence, its large-scale presence and diversified portfolio with respect to geography and industry make its revenues less volatile.
OUT’s Digital Billboard Portfolio
OUTFRONT Media is making efforts to convert its business from traditional static billboard advertising to digital displays. This has helped the company expand the number of new advertising relationships, providing scope to boost its digital revenues.
In the first nine months of 2024, the company built or converted 64 new digital billboard displays in the United States. Moreover, it built, converted or replaced 5,717 digital transit and other displays in the United States in the same period. Such efforts are likely to pay off well in the upcoming period, positioning the company well for growth.
It has also made strategic investments in its digital billboard portfolio over the years, and these investments have started reaping benefits. Its total digital billboard displays reached 1,923 at the end of the third quarter of 2024.
OUT’s Strategic Acquisitions
OUTFRONT Media is also focused on enhancing its portfolio quality via strategic acquisitions. In the first nine months of 2024, the company acquired several assets for approximately $11.2 million. In 2023, it acquired several assets for around $33.7 million. With such expansion efforts, it remains well-poised to grow over the long term.
OUT’s Favorable OOH Advertising
The company is leveraging out-of-home (OOH) advertising, which has a lower cost compared with other forms of media, to drive its performance. In the upcoming years, higher technology investments are expected to provide further support to OOH advertising. Capitalizing on this, the company is expanding its footprint and providing unique technology platforms to marketers to tap growth opportunities.
Risks Likely to Affect OUT’s Positive Trend
OUTFRONT Media faces competition from other outdoor advertisers. This is anticipated to affect the company’s pricing power in the market.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are SL Green SLG and CareTrust REIT CTRE, each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for SL Green’s 2024 FFO per share has moved 1.8% northward over the past week to $7.79.
The Zacks Consensus Estimate for CareTrust’s current-year FFO per share has been raised marginally over the past two months to $1.50.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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