UK markets open in 3 hours 51 minutes
  • NIKKEI 225

    26,085.07
    +149.45 (+0.58%)
     
  • HANG SENG

    21,659.97
    -199.82 (-0.91%)
     
  • CRUDE OIL

    108.05
    -0.38 (-0.35%)
     
  • GOLD FUTURES

    1,810.10
    +8.60 (+0.48%)
     
  • DOW

    31,097.26
    +321.86 (+1.05%)
     
  • BTC-GBP

    15,762.79
    -222.51 (-1.39%)
     
  • CMC Crypto 200

    411.80
    -8.34 (-1.99%)
     
  • ^IXIC

    11,127.84
    +99.14 (+0.90%)
     
  • ^FTAS

    3,940.03
    -0.87 (-0.02%)
     

With EPS Growth And More, Lamar Advertising (NASDAQ:LAMR) Is Interesting

  • Oops!
    Something went wrong.
    Please try again later.
·3-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Lamar Advertising (NASDAQ:LAMR). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

View our latest analysis for Lamar Advertising

How Fast Is Lamar Advertising Growing?

As one of my mentors once told me, share price follows earnings per share (EPS). That means EPS growth is considered a real positive by most successful long-term investors. Over the last three years, Lamar Advertising has grown EPS by 8.1% per year. That's a pretty good rate, if the company can sustain it.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Lamar Advertising shareholders can take confidence from the fact that EBIT margins are up from 26% to 30%, and revenue is growing. That's great to see, on both counts.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

earnings-and-revenue-history
earnings-and-revenue-history

Fortunately, we've got access to analyst forecasts of Lamar Advertising's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Lamar Advertising Insiders Aligned With All Shareholders?

Since Lamar Advertising has a market capitalization of US$10b, we wouldn't expect insiders to hold a large percentage of shares. But we do take comfort from the fact that they are investors in the company. Indeed, they have a glittering mountain of wealth invested in it, currently valued at US$599m. This suggests to me that leadership will be very mindful of shareholders' interests when making decisions!

It means a lot to see insiders invested in the business, but I find myself wondering if remuneration policies are shareholder friendly. Well, based on the CEO pay, I'd say they are indeed. I discovered that the median total compensation for the CEOs of companies like Lamar Advertising, with market caps over US$8.0b, is about US$13m.

The CEO of Lamar Advertising only received US$5.9m in total compensation for the year ending . That looks like modest pay to me, and may hint at a certain respect for the interests of shareholders. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. I'd also argue reasonable pay levels attest to good decision making more generally.

Should You Add Lamar Advertising To Your Watchlist?

One positive for Lamar Advertising is that it is growing EPS. That's nice to see. Earnings growth might be the main game for Lamar Advertising, but the fun does not stop there. With a meaningful level of insider ownership, and reasonable CEO pay, a reasonable mind might conclude that this is one stock worth watching. However, before you get too excited we've discovered 3 warning signs for Lamar Advertising that you should be aware of.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting