An outdoor advertising company that operates three types of outdoor advertising displays: billboards, logo signs and transit advertising displays.
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Overpriced
i see electronic board revenues as oversold given probable resistance in many markets by local governments due to potential safety issues. Interstate highway application of this idea is not as likely nor will it be as cost effective. Is this part of your valuation issue or do you see others?
Your thesis may indeed be correct. My simplistic mind looks at a current PE of approx 150 (TTM) and projected 5-yr analyst growth of 25%. This gives you a PEG of about 6 (>1 is considered over-priced). This company would need to grow at 100% per year to justify the price -- that's just not going to happen.
However I do think Lamar is an excellent company w/ great competitive advantages --> just looking for a reasonable stock price.
You're right. That's a very simplistic way of looking at. While it looks wildly overvalued on a P/E basis, it's much more reasonable on a P/CF metric, where it trades at around a 17x multiple. Lamar is punished by GAAP accounting for the "depreciation" of their billboards they bought years ago, which is cash they currently have on hand. I'd suggest focusing your valuation on cash flows, rather than earnings, which are a bad distortion of this company's prospects.
I believe Lamar has something around 50,000 billboards and these billboards are worth something close to 10 times their forward cash flow... and if the average yearly forward cash flow is $6,000.00 then Lamar would have a value of plus $122, 000, 000 instead of minus ($1,286,000,000.00) and this would not include all the other types of advertising Lamar is into .... I did not check out the actual numbers of billboards but I am aware that some billboard rent for much more than than 500 hundred a month or $6,000.00 a year that I have used here as this type of advertising depending on the amount of cars that drive by. And as for Internet advertising replacing bill boards I don't think so as Billboards let you know when gas, food, homes, auto dealerships and other business are located when you are in your car and are approching or able to drive to their locations and that is a lot different than sitting in your chair in front of a monitor and reading.... How much is name recognition worth when a purchase is not made ?