Lamar Buys Marco Outdoor, Strengthens New Orleans Presence

Zacks

In order to strengthen its presence in the New Orleans region, Lamar Advertising Co. (LAMR) disclosed the buyout of a regional firm – Marco Outdoor Advertising, Inc. Though it was an all-cash deal, the term details have not been revealed.

With this acquisition, Lamar added over 150 bulletin faces to its portfolio. The acquired assets of Marco are located especially alongside the Pontchartrain Expressway and other chief transportation networks of New Orleans. Apart from this, Marco’s inventory is further spread in the communities on the North shore of Lake Pontchartrain.

For Lamar, the above-mentioned transaction is a strategic fit as it will enhance its overall portfolio through the inclusion of REIT-qualified, premium billboard assets. Notably, in Jan 2014, this outdoor advertising services provider converted itself into a real estate investment trust (REIT) to capitalize on a seemingly more favorable tax environment.

Lamar is one of the largest owners and operators of outdoor advertising structures in the U.S. This Baton Rouge, LA–based company offers advertising solutions in the form of bulletins, posters, digital billboards, buses, benches, and transit shelters. The company presently operates more than 150 outdoor advertising companies in 44 states of the U.S., Canada and Puerto Rico.

Although the acquisition of outdoor advertising assets bodes well for Lamar’s long-term growth strategy, we believe that this Zacks Rank #4 (Sell) stock holds negative near-term sentiments. Lamar’s earnings had missed the Zacks Consensus Estimate by 28.6% in first-quarter 2014 and things do not look very encouraging for the upcoming earnings announcement. In fact, Lamar has an Earnings ESP of -11.43% for second-quarter 2014 and this coupled with Zacks Rank #4, does not conclusively show that the company will beat earnings this season.

Investors interested in the advertising/marketing services industry may consider stocks like Clear Channel Outdoor Holdings Inc. (CCO), MDC Partners Inc. (MDCA) and Harte-Hanks Inc. (HHS), each carrying a Zacks Rank #2 (Buy).

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