Shares of Outfront Media (NYSE: OUT) were soaring today as the outdoor advertising company delivered solid results in its fourth-quarter earnings report.
Outfront overcame headwinds including the Hollywood writers' and actors' strikes, and weakness in the transit advertising market to send the stock up 17.4% as of 3:08 p.m. ET Thursday.
Image source: Getty Images.
Outfront stays current
Overall revenue growth for Outfront Media was modest, up 1.3% to $501.2 million, but that was better than estimates of $495.9 million.
Growth was driven by higher average revenue per display, and billboard revenue rose 2.6% in the period. However, that was offset by a 4% decline in its transit and other categories due to falling prices. The company took an impairment charge earlier in the year on its transit business, signaling that that property is worth less than it had earlier estimated.
On the bottom line, its adjusted operating income before depreciation and amortization (OIBDA) fell 1.3% to $151.7 million, but investors still seemed to be happy with that level of profitability. Earnings per share improved from $0.34 to $0.35, though that was a penny short of estimates.
Outfront is structured as a real estate investment trust (REIT), which is typically judged by adjusted funds from operations; that metric improved from $96.1 million in the year-ago period to $108.1 million.
CEO Jeremy Male was also optimistic about 2024, saying, "While it is still early in 2024, our business is accelerating and we expect that OUTFRONT, and the entire out-of-home industry, will benefit from a strong media market this year."
Can Outfront keep gaining?
Outfront did not offer guidance for 2024, but the trends in the advertising industry do seem to favor the company as digital advertisers are seeing revenue growth accelerate after a lull in 2022 and 2023. Meanwhile, trends like return-to-work also favor Outfront.
The stock's primary appeal to investors is likely its dividend, which yields 8.3% after the stock's pop today. Based on the latest results and management commentary, that dividend looks well funded and could go even higher.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Outfront Media. The Motley Fool has a disclosure policy.
