OUTFRONT Media (OUT – Free Report) enjoys a diversified portfolio of advertising sites, geography and industry-wise, in some of the key markets of the United States. Its efforts to expand the out-of-home (OOH) advertising platform bode well for long-term growth. Strategic acquisitions to enhance its portfolio are encouraging.
However, fluctuations in advertising expenditures and economic conditions are likely to hurt its top-line growth and operating results.
What’s Aiding OUTFRONT Media?
OUTFRONT Media’s advertising sites are geographically diversified, with a presence across the largest markets in the United States. The large-scale presence enables its clients to reach a national audience and also provides the flexibility to tailor campaigns to specific regions or markets. Hence, the company’s large-scale presence and diversified portfolio with respect to geography and industry make its revenues less volatile. We estimate a year-over-year marginal increase in its total revenues for 2025.
OUTFRONT Media has been making efforts to convert its business from traditional static billboard advertising to digital displays, which are helping expand the number of new advertising relationships and providing scope to boost digital revenues. In 2024, the company built or converted 89 digital billboard displays in the United States. Moreover, it built, converted or replaced 6,664 digital transit and other displays in the United States in the same period. Such expansion efforts in new assets and technology are likely to drive the company’s revenue growth in the upcoming period.
OUTFRONT Media has also capitalized on acquisitions to enhance its portfolio. In 2024, the company acquired several assets for approximately $19.5 million. Looking at its current acquisition pipeline, the company expects its 2025 deal activity to remain at similar levels compared to those seen in the last couple of years. With such expansion efforts, OUT remains poised to grow over the long term.
In the upcoming years, higher technology investments are expected to provide support to OOH advertising. To tap growth opportunities, OUT is expanding its footprint and providing a unique technology platform to marketers. This will help advertisers to channelize their funds efficiently to OUT’s assets and is anticipated to serve as a major growth driver.
What’s Hurting OUTFRONT Media?
OUTFRONT Media’s revenues and operating results are sensitive to fluctuations in advertising expenditures and general economic conditions. Given the macroeconomic uncertainties, we expect the top-line growth to be affected to some extent in the near term.
OUT faces competition from other outdoor advertisers for customers, display locations and structures. The company also competes with other media, including online, mobile and social media advertising platforms and traditional advertising platforms such as television, radio, print and direct mail marketers. It also competes with a wide variety of out-of-home media, including advertising in shopping centers, airports, movie theaters, supermarkets and taxis. This is anticipated to affect the company’s pricing power in the market.
In the past six months, shares of this Zacks Rank #3 (Hold) company have declined 4.9% compared with the industry’s decline of 8.2%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks to consider from the broader REIT sector include Cousins Properties (CUZ – Free Report) and Welltower (WELL – Free Report) , each carrying a Zacks Rank #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 Cousins Properties’ 2025 FFO per share has been raised one cent over the past week to $2.79.
The Zacks Consensus Estimate for Welltower’s current-year FFO per share has moved one cent northward over the past week to $4.90.
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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