Billboard Business, Billboard Investing

Stock Analyst Skeptical about Lamar

Here’s an interesting Seeking Alpha article on Lamar and the billboard industry.  The article mentions two reasons why I like the billboard industry:

(1)  Barriers to entry caused by the need to get a sign permit.

(2) The low cost of outdoor versus other forms of local media.  Outdoor has a cost per thousand which is well below local TV, magazines and newspapers.

The stock analyst is skeptical about Lamar for a couple reasons:

(1) He is worried about Lamar’s ability to pay dividends in a recession.  The analyst wants to see an 11% cash dividend on the Lamar REIT and he thinks this won’t be sustainable during a recession.  In 2009 Lamar’s revenues declined 12%.

(2)  He is worried about local regulations which will require sign companies to take down illegal signs without just compensation.  I can’t think of an instance where this has happened to a client of mine.  8-sheets are a different matter.  I think many 8 sheet operators have unpermitted, illegal signs which may be at regulatory risk for fines and takedowns.

One criticism of the piece.  I found only 1 mention of digital signs and that was in a table.  How can you write an article analyzing the prospects of an outdoor advertising company without discussing the impact of digital signs.


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