Why Lamar Advertising Slumped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of billboard operator Lamar Advertising (NAS: LAMR) dipped 10% today after the company reported disappointing first-quarter earnings results.
So what: For the quarter, Lamar reported a 4.3% increase in revenue to $266.3 million but noted a substantially wider-than-expected loss of $0.25 per share to repay roughly $30 million worth of debt due in 2015. Even worse, Lamar forecast that its second-quarter revenue would come in around $303 million, which was slightly shy of Wall Street's forecast for $305.1 million.
Now what: This really isn't anything new for Lamar, which has been trading at an astronomical valuation, in my eyes, for years. Lamar has lost money in two of the past three years and is currently valued at 52 times forward earnings. This is the reason I highlighted the company as a stock worth selling back in February 2011. Time hasn't been kind to this company, and I still feel it represents a poor investment.
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At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.