Lamar Advertising (LAMR) Q2 FFO Misses Estimates, Stock Down

Shares of Lamar Advertising Company (NASDAQ:LAMR) slipped 2.9%, during Wednesday's regular trading session, after the company reported a lower-than-expected performance for second-quarter 2019.

The company reported second-quarter adjusted funds from operations (FFO) per share of $1.54, missing the Zacks Consensus Estimate of $1.66. Moreover, net revenues for the quarter came in at $448.7 million, which also lagged the Zacks consensus Estimate of $453.4 million.

Despite the softer-than-expected quarterly performance, on a year-over-year basis, adjusted FFO per share inched up 1.3%, while net revenues climbed 6.9%. Acquisition-adjusted net revenues increased 2.4%, while acquisition-adjusted EBITDA was up 2.1%. The company witnessed a 4.3% increase in local revenues, while same unit digital revenues went up 4.3%.

Quarter in Detail

Operating income improved 6.2% from the prior-year quarter to $144.1 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 6.2%, year over year, to $207.9 million. Additionally, free cash flow of $132.9 million in the June-end quarter remained consistent year over year.

At the end of second-quarter 2019, Lamar had total liquidity of $429.2 million, of which $411.9 million was available for borrowing under its revolving senior credit facility, and around $17.3 million in cash and cash equivalents.

Our Take

Lamar’s softer performance in the second quarter is discouraging. Nevertheless, backed by solid pacings in the second half of the year, the company maintained its prior outlook of adjusted FFO per share.

The company’s robust national presence, tenants from diverse industries and valuable permits augur well for long-term growth. Further, the company remains focused to strengthen its position in strategic markets through accretive acquisitions. In fact, the company’s acquisition pipeline appears robust, with more than $200 million in outdoor assets acquired so far in this year. Nonetheless, high investment expenditure for buyouts might take a toll on its balance sheet.

Lamar currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

Public Storage (NYSE:PSA) reported second-quarter 2019 core FFO per share of $2.64, which improved 2.7% from the prior-year figure of $2.57. The reported figure also surpassed the Zacks Consensus Estimate by a whisker. Higher realized annual rent per occupied square foot supported the company’s same-store performance. Additionally, Public Storage benefited from its expansion efforts in the reported quarter.

Federal Realty Investment Trust (NYSE:FRT) posted second-quarter FFO per share of $1.60, which beat the Zacks Consensus Estimate of $1.58. The reported figure also improved from the prior-year tally of $1.55. Results reflected rise in property operating income and cash-basis rollover growth on comparable spaces. The company also hiked its regular quarterly dividend.

Equity Residential (NYSE:EQR) recorded second-quarter 2019 normalized FFO per share of 86 cents, which surpassed the Zacks Consensus Estimate by a whisker. Moreover, normalized FFO per share figure came in 6.2% higher than the 81 cents reported in the year-ago quarter. Results mirrored improved same-store net operating income (NOI) and lease-up NOI, and other non-same store NOI.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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