Why Lamar Advertising Is Poised to Plunge

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, outdoor advertising company Lamar Advertising has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Lamar, and see what CAPS investors are saying about the stock right now.

Lamar facts

  

Headquarters (founded)

Baton Rouge, La. (1989)

Market Cap

$3.6 billion

Industry

Advertising

Trailing-12-Month Revenue

$1.2 billion

Management

CEO Sean Reilly (since 2011)

CFO Keith Istre (since 1989)

Return on Equity (average, past 3 years)

(1.9%)

Cash/Debt

$38.5 million / $2.1 billion

Competitors

CBS Outdoor

Clear Channel Outdoor Holdings

JCDecaux


Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 55% of the 186 members who have rated Lamar believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, Clint35, highlighted Lamar's valuation as particularly unsustainable:

Way too expensive! Sales are growing at a little under 3.5%. ... Let's say sales do pick up and they get to a point where they're earning $2 per share. Divide the share price $38.64 by $2 that gives you a P/E of around 19. That's still too expensive in my opinion. But if the P/E and sales growth get to where they're matching that's when I'll end this call. Until then, I can't picture this one beating the market. By the way, they also have a lot of debt.

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The article Why Lamar Advertising Is Poised to Plunge originally appeared on Fool.com.

Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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