Lamar Advertising Co
NASDAQ:LAMR
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Intrinsic Value
The intrinsic value of one LAMR stock under the Base Case scenario is 123.42 USD. Compared to the current market price of 134.99 USD, Lamar Advertising Co is Overvalued by 9%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Lamar Advertising Co
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Fundamental Analysis
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Lamar Advertising Co., founded in 1902, has grown into one of the largest outdoor advertising companies in the United States, transforming the way brands connect with consumers. With a diverse portfolio that includes billboards, transit advertising, and digital displays, Lamar leverages prime locations across major cities and highways to provide companies with the visibility they need in a crowded market. The company’s strategic focus on high-demand areas allows it to capture the attention of millions of daily commuters and residents, making its platforms a valuable asset for advertisers seeking to enhance brand recognition and engagement. This extensive network not only fosters consistent r...
Lamar Advertising Co., founded in 1902, has grown into one of the largest outdoor advertising companies in the United States, transforming the way brands connect with consumers. With a diverse portfolio that includes billboards, transit advertising, and digital displays, Lamar leverages prime locations across major cities and highways to provide companies with the visibility they need in a crowded market. The company’s strategic focus on high-demand areas allows it to capture the attention of millions of daily commuters and residents, making its platforms a valuable asset for advertisers seeking to enhance brand recognition and engagement. This extensive network not only fosters consistent revenue streams but also positions Lamar favorably to capitalize on the growing demand for advertising space.
Investors looking at Lamar Advertising will find a company that has adeptly navigated the shifting landscape of the advertising industry. The company has embraced the digital transformation, incorporating advanced technologies to optimize its advertising offerings and track campaign effectiveness. Lamar's robust financial health, marked by steady cash flow and dividends, reflects its commitment to shareholder value. As businesses increasingly turn to outdoor advertising as a means to stand out in a saturated digital space, Lamar stands poised to continue its upward trajectory. For those considering an investment, Lamar offers a compelling combination of stability, growth potential, and strategic innovation in a dynamic market landscape.
Lamar Advertising Company is primarily engaged in the out-of-home (OOH) advertising industry, and its business segments can be broadly categorized into the following core areas:
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Outdoor Advertising:
- This is Lamar's primary segment and includes various types of outdoor advertising formats such as billboards, digital billboards, and posters. Lamar operates a vast inventory of advertising structures in high-traffic areas, including highways and cities, allowing for a wide reach to audiences.
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Transit Advertising:
- Lamar provides advertising services on transit-related formats, which includes advertisements placed on public transportation vehicles (like buses and subways) and at transit stations. This segment caters to urban areas where public transportation is widely used.
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Digital Advertising:
- An increasingly important segment, Lamar has invested in digital billboards that allow for dynamic and higher-frequency advertising. These digital displays can rotate multiple advertisements in a short period, offering flexibility to advertisers.
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Specialty Advertising:
- This segment may include unique advertising placements such as in airports or at events. Specialty advertising allows Lamar to exploit niche markets and provide advertisers with distinctive opportunities to engage consumers.
Overall, Lamar Advertising Company focuses on creating visibility and reach for advertisers across various outdoor environments, leveraging both traditional and digital formats to optimize advertising campaigns. Their strategic locations and extensive networks make them an influential player in the OOH advertising sector.
Lamar Advertising Company has several unique competitive advantages that contribute to its prominent position in the advertising industry, particularly in outdoor advertising. Here are some of the key factors that set it apart from its rivals:
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Extensive Inventory: Lamar boasts one of the largest networks of billboard and outdoor advertising assets in the U.S. With thousands of locations across various markets, it has significant inventory that allows for wide-ranging advertising options.
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Geographic Diversification: The company's presence in both major metropolitan areas and smaller regional markets provides it with versatile advertising platforms. This geographic diversity allows Lamar to reach various demographics effectively and reduces reliance on any single market.
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Long-term Contracts and Relationships: Lamar often secures long-term contracts with advertisers, which helps to build stable revenue streams. Established relationships with local and national brands enhance customer loyalty and repeat business.
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Technology and Data Utilization: The company has invested in technology that allows for better targeting and measurement of advertising effectiveness. This includes digital billboards, which offer dynamic content updates and real-time advertising opportunities, allowing for more engaging campaigns compared to static options.
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Strong Brand and Reputation: Lamar has built a trusted brand over its long history in the industry. Brand recognition and reputation for quality service help attract clients who prefer reliability.
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Operational Efficiency: Strong operational practices and economies of scale from its large footprint allow Lamar to maintain competitive pricing and efficient service delivery, which can be challenging for smaller firms to replicate.
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Regulatory Knowledge and Compliance: Operating in the outdoor advertising sector often requires knowledge of complex zoning laws and regulations. Lamar's experience and expertise in navigating these regulatory landscapes can serve as a barrier to entry for new competitors.
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Diverse Advertising Solutions: In addition to traditional billboards, Lamar offers transit advertising, airport advertising, and digital advertising options, catering to a wide array of client needs. This diversity in product offerings allows for cross-selling opportunities and more comprehensive advertising solutions.
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Strong Sales and Marketing Team: Their established salesforce is skilled at identifying and catering to the advertising needs of various client segments, which enhances customer acquisition and retention.
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Sustainability Initiatives: Increasingly, companies are looking for partners that prioritize sustainability. Lamar’s moves towards environmentally friendly practices can be attractive to clients focused on corporate responsibility.
By leveraging these competitive advantages, Lamar Advertising Co positions itself strongly against rivals in the outdoor advertising space.
Lamar Advertising Company, a major player in the outdoor advertising sector, faces various risks and challenges that could impact its operations and profitability in the near future. Here are some of the key risks and challenges:
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Economic Downturns: Advertising spending is often cyclical and can be significantly affected by economic conditions. A recession or slowdown can lead businesses to cut back on advertising budgets, impacting Lamar’s revenue streams.
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Competition: The outdoor advertising industry is competitive, with players like Clear Channel Outdoor, Outfront Media, and digital platforms gaining more traction. This competition could lead to pricing pressures and reduced market share.
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Technological Disruption: The rise of digital advertising and programmatic advertising could pose a challenge to traditional outdoor advertising. Lamar needs to adapt and integrate digital solutions to remain competitive.
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Regulatory Risks: Changes in zoning laws, advertising regulations, and restrictions on outdoor advertising in various municipalities can adversely affect Lamar's ability to operate and expand its billboard networks.
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Environmental Concerns: Growing awareness and activism around environmental issues could lead to increased scrutiny of outdoor advertising practices and pressures to adopt more sustainable practices.
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Impact of COVID-19: Although the situation has improved, the pandemic has permanently altered some consumer behaviors and preferences, which could impact foot traffic and, consequently, outdoor advertising effectiveness.
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Technological Investments: The need for continuous investment in new technologies (like digital billboards) can strain financial resources or divert management attention from core operations.
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Consumer Trends: Changes in consumer behavior, such as increased use of mobile devices and shifts towards digital media consumption, may reduce the effectiveness of traditional outdoor advertising.
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Debt Levels: If Lamar Advertising has considerable debt, rising interest rates or cash flow challenges could make servicing that debt more difficult and limit its financial flexibility.
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Data Privacy Concerns: As more advertising becomes data-driven, regulatory issues surrounding consumer privacy and data usage can complicate operations and lead to legal challenges.
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Dependence on Major Clients: A significant portion of revenue might come from a limited number of larger clients. The loss of any of these major clients could have a disproportionate impact on earnings.
To navigate these risks, Lamar Advertising needs to implement strategies that enhance its competitiveness, diversify its revenue streams, and remain adaptable to changing market conditions.
Revenue & Expenses Breakdown
Lamar Advertising Co
Balance Sheet Decomposition
Lamar Advertising Co
Current Assets | 440.7m |
Cash & Short-Term Investments | 77.9m |
Receivables | 318.5m |
Other Current Assets | 44.3m |
Non-Current Assets | 6.1B |
PP&E | 2.9B |
Intangibles | 3.2B |
Other Non-Current Assets | 92.8m |
Current Liabilities | 1.1B |
Accounts Payable | 21.3m |
Accrued Liabilities | 280.1m |
Other Current Liabilities | 763.1m |
Non-Current Liabilities | 4.3B |
Long-Term Debt | 2.8B |
Other Non-Current Liabilities | 1.6B |
Earnings Waterfall
Lamar Advertising Co
Revenue
|
2.2B
USD
|
Cost of Revenue
|
-404.1m
USD
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Gross Profit
|
1.8B
USD
|
Operating Expenses
|
-1.1B
USD
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Operating Income
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684.5m
USD
|
Other Expenses
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-180.2m
USD
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Net Income
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504.3m
USD
|
Free Cash Flow Analysis
Lamar Advertising Co
USD | |
Free Cash Flow | USD |
Lamar delivered a robust Q2 2024, achieving a 3.9% revenue increase and a 6.3% rise in adjusted EBITDA, fueled by high local and regional advertising demand. Despite national market weaknesses, programmatic sales surged 73%, contributing to a 9.5% increase in AFFO per share to $2.08. The company also improved its EBITDA margin to 48% and recommended a Q3 distribution increase to $1.04 per share. Looking ahead, Lamar anticipates mid-single-digit revenue growth for H2 2024, with political advertising potentially boosting Q4.
What is Earnings Call?
LAMR Profitability Score
Profitability Due Diligence
Lamar Advertising Co's profitability score is 71/100. The higher the profitability score, the more profitable the company is.
Score
Lamar Advertising Co's profitability score is 71/100. The higher the profitability score, the more profitable the company is.
LAMR Solvency Score
Solvency Due Diligence
Lamar Advertising Co's solvency score is 25/100. The higher the solvency score, the more solvent the company is.
Score
Lamar Advertising Co's solvency score is 25/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
LAMR Price Targets Summary
Lamar Advertising Co
According to Wall Street analysts, the average 1-year price target for LAMR is 132.35 USD with a low forecast of 123.22 USD and a high forecast of 147 USD.
Dividends
Current shareholder yield for LAMR is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Profile
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Industry
Market Cap
Dividend Yield
Description
Lamar Advertising Co. engages in advertising services. The company is headquartered in Baton Rouge, Louisiana and currently employs 3,350 full-time employees. The firm rents space for advertising on billboards, buses, shelters, benches, logo plates and in airport terminals. The company operates three types of outdoor advertising displays: billboards, logo signs and transit advertising displays. The firm owns and operates approximately 153,800 billboard advertising displays in 45 states and Canada. The company rents its advertising space on two types of billboards: bulletins and posters. In addition to traditional billboards, it also rents space on digital billboards, which are generally located on traffic arteries and city streets. The firm owns and operates approximately 3,900 digital billboard advertising displays in 43 states and Canada. The company also provides logo signs in the United States, operating over 23 of the 26 privatized state logo sign contracts. The company operates approximately 137,800 logo sign advertising displays in 23 states and the province of Ontario, Canada.
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The intrinsic value of one LAMR stock under the Base Case scenario is 123.42 USD.
Compared to the current market price of 134.99 USD, Lamar Advertising Co is Overvalued by 9%.