By Brent Baer, Publisher, OOH Today
2023 was a strong year for the stock market, but not so much for OUTFRONT Media. Their shares lost 16% of their value, struggling with a weak advertising market, lease inflation, and a high debt.
Seeking Alpha, Alpha’s Quant Rating system (which consistently beats the market), says that OUTFRONT Media shares have underperformed in 2023.
OUTFRONT is in the process of aggressively converting its static billboards to digital for increased business. Digital displays have the opportunity for more than one ad on a given screen, which potentially makes them more profitable than static billboards.
OUTFRONT’s transit display business, which accounts for less than 20% of revenue is not performing well and arguably has not achieved its goals from day one of taking over the NYC and DC transit franchises. Everyone knew going into the franchise it would be a longer profitability cycle than traditional OOH. The pandemic brought about an unforeseen disruption in ad spend. Specifically, traditional transit ad categories have not returned despite the significant capital poured into NYC in upgrading to impressive digital offerings. One of those ad verticals, television shows and movies are struggling due to the strikes in the entertainment industry leading to many movies and shows being delayed. A recent report from the LA Times said 2026 will be the earliest to see the movie business back to pre-pandemic levels and moviegoers returning to the box office. Ridership is still off with workers’ slow return to in-office work and on hybrid schedules, which translates to far fewer daily commuters seeing ads than pre-pandemic.
Seeking Alpha analysis suggests that “OUTFRONT may be more of a value trap than a value play” and that in terms of stocks, Lamar is looking more attractive.
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