On today’s podcast billboard valuation expert Paul Wright from SignValue gives his opinion of the big three and says that post pandemic values will be higher than pre-pandemic values.

Podcast: Play in new window | Download (Duration: 21:49 — 30.1MB)

Here are the highlights.

On Lamar Advertising

Well, Lamar, like the other public companies had a great third quarter compared to 2020 but that can be a little bit misleading with all of the companies.  Revenues are up two and three fold at each of the public companies.  But Lamar has done a good job of controlling lease costs.  Their revenues are growing up 23-24% in the third quarter and they’re just managing things very well…We like the deployment of digital they are doing.  They’ve had 135 digital units go up in the first three quarters…And we think that will continue into next year.  They’ve also made 100 million in acquisitions through the third quarter.

OUTFRONT

Outfront is recovering really well.  They’ve had a pretty solid year again comparing third quarters….Their revenue is up substantially…They’re controlling their lease costs really well and continuing to deploy digital…They put up 34 new digital billboards in the third quarter…I think that transit has also improved for them substantially.  We probably saw the biggest overreaction in the transit market…things are turning around for OUTFRONT and we are optimistic about their performance next year.

Clear Channel Outdoor

Similar situation.  They are continuing to improve and turn things around.  Not quite as impressive as OUTFRONT.  They’ve still got some troubles as you know.  They’ve got quite a bit of debt.  They put up 17 new digital displays in the third quarter…We like the direction they are headed.  One of the issues that we’ve seen with Clear Channel is their lease costs.  That has not gone down as much as the other two in terms of a share of their revenue.  So they’ll need to work on lease costs a little bit and see where they can improve…

The independent out of home companies

The other independents are extremely active.  We’re seeing a lot of activity from Trailhead and Lindmark and others who are recognizing opportunities and seizing them.  And we’re continuing to see much smaller independents who are starting to aggregate signs where they can and make a more efficient plant where they can by doing so.  So I would say that 2021 will probably end up being one of the record years in terms of transactions.  It’s been a good year for independents to go out and either buy or sell depending on what their strategies are…

I can’t let an out of home valuation expert off the podcast without asking about out of home valuations.

As I mentioned, the public company multiples peaked in the first quarter.  So we’ve seen those trail off and slow down in the second and third quarters and get back into kind of a normal range in terms of multiples or revenue and multiples of cashflow…In terms of values at the end of the day we end up with higher overall values in both the public companies and the independents than we were at in late 2019, pre-pandemic.

Is a 10-12X cashflow multiple reasonable for out of home and a 10-14X cashflow multiple reasonable for easements?

Yea.  That’s reasonable.  We’ll see anything from a low of 6-7 times cashflow to highs of 14-15 times cashflow.  Generally speaking you’ll see it in the 9-12 range.

[wpforms id=”9787″]

Paid Advertisement