NEW YORK ( TheStreet) -- Lamar Advertising (Nasdaq: LAMR) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow. Highlights from the ratings report include:
- LAMAR ADVERTISING CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, LAMAR ADVERTISING CO turned its bottom line around by earning $0.09 versus -$0.44 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus $0.09).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 189.5% when compared to the same quarter one year prior, rising from -$7.12 million to $6.37 million.
- 37.10% is the gross profit margin for LAMAR ADVERTISING CO which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.20% trails the industry average.
- Net operating cash flow has decreased to $96.12 million or 27.53% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- LAMR has underperformed the S&P 500 Index, declining 16.45% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
-- Written by a member of TheStreet RatingsStaff