Intrinsic value of Lamar Advertising Cl A - LAMR

Previous Close

$75.75

  Intrinsic Value

$35.62

stock screener

  Rating & Target

str. sell

-53%

Previous close

$75.75

 
Intrinsic value

$35.62

 
Up/down potential

-53%

 
Rating

str. sell

We calculate the intrinsic value of LAMR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 7.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.70
  2.93
  3.14
  3.32
  3.49
  3.64
  3.78
  3.90
  4.01
  4.11
  4.20
  4.28
  4.35
  4.42
  4.47
  4.53
  4.57
  4.62
  4.65
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.83
  4.85
  4.87
  4.88
  4.89
Revenue, $m
  1,583
  1,629
  1,680
  1,736
  1,797
  1,862
  1,932
  2,008
  2,088
  2,174
  2,265
  2,362
  2,465
  2,574
  2,689
  2,811
  2,939
  3,075
  3,218
  3,369
  3,528
  3,695
  3,872
  4,057
  4,253
  4,458
  4,675
  4,902
  5,141
  5,393
Variable operating expenses, $m
  944
  965
  987
  1,011
  1,038
  1,066
  1,097
  1,130
  1,165
  1,202
  988
  1,031
  1,076
  1,123
  1,173
  1,226
  1,283
  1,342
  1,404
  1,470
  1,539
  1,613
  1,690
  1,771
  1,856
  1,946
  2,040
  2,139
  2,244
  2,353
Fixed operating expenses, $m
  165
  168
  172
  176
  180
  183
  187
  192
  196
  200
  205
  209
  214
  218
  223
  228
  233
  238
  243
  249
  254
  260
  266
  271
  277
  283
  290
  296
  303
  309
Total operating expenses, $m
  1,109
  1,133
  1,159
  1,187
  1,218
  1,249
  1,284
  1,322
  1,361
  1,402
  1,193
  1,240
  1,290
  1,341
  1,396
  1,454
  1,516
  1,580
  1,647
  1,719
  1,793
  1,873
  1,956
  2,042
  2,133
  2,229
  2,330
  2,435
  2,547
  2,662
Operating income, $m
  474
  496
  521
  549
  579
  612
  648
  686
  727
  771
  1,072
  1,122
  1,176
  1,232
  1,292
  1,356
  1,424
  1,495
  1,570
  1,650
  1,734
  1,823
  1,917
  2,015
  2,120
  2,229
  2,345
  2,467
  2,595
  2,730
EBITDA, $m
  1,102
  1,136
  1,173
  1,214
  1,258
  1,307
  1,359
  1,415
  1,475
  1,540
  1,608
  1,681
  1,759
  1,841
  1,929
  2,021
  2,119
  2,223
  2,332
  2,447
  2,569
  2,698
  2,833
  2,976
  3,126
  3,285
  3,452
  3,627
  3,812
  4,007
Interest expense (income), $m
  0
  138
  142
  147
  153
  159
  166
  173
  180
  189
  197
  207
  217
  227
  238
  250
  263
  276
  290
  305
  320
  337
  354
  372
  392
  412
  433
  456
  479
  504
  530
Earnings before tax, $m
  336
  354
  374
  396
  420
  447
  475
  506
  539
  574
  865
  906
  948
  994
  1,042
  1,093
  1,147
  1,205
  1,265
  1,330
  1,397
  1,469
  1,544
  1,624
  1,708
  1,796
  1,890
  1,988
  2,091
  2,201
Tax expense, $m
  91
  96
  101
  107
  113
  121
  128
  137
  145
  155
  234
  245
  256
  268
  281
  295
  310
  325
  342
  359
  377
  397
  417
  438
  461
  485
  510
  537
  565
  594
Net income, $m
  245
  258
  273
  289
  307
  326
  347
  369
  393
  419
  632
  661
  692
  726
  761
  798
  838
  879
  924
  971
  1,020
  1,072
  1,127
  1,185
  1,247
  1,311
  1,379
  1,451
  1,527
  1,606

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  4,324
  4,451
  4,590
  4,743
  4,909
  5,087
  5,279
  5,485
  5,705
  5,940
  6,189
  6,454
  6,735
  7,032
  7,347
  7,679
  8,030
  8,401
  8,792
  9,204
  9,639
  10,097
  10,579
  11,086
  11,620
  12,182
  12,773
  13,394
  14,048
  14,735
Adjusted assets (=assets-cash), $m
  4,324
  4,451
  4,590
  4,743
  4,909
  5,087
  5,279
  5,485
  5,705
  5,940
  6,189
  6,454
  6,735
  7,032
  7,347
  7,679
  8,030
  8,401
  8,792
  9,204
  9,639
  10,097
  10,579
  11,086
  11,620
  12,182
  12,773
  13,394
  14,048
  14,735
Revenue / Adjusted assets
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
  0.366
Average production assets, $m
  3,746
  3,856
  3,977
  4,109
  4,252
  4,407
  4,574
  4,752
  4,943
  5,146
  5,362
  5,591
  5,834
  6,092
  6,365
  6,653
  6,957
  7,278
  7,617
  7,974
  8,350
  8,747
  9,164
  9,604
  10,067
  10,553
  11,065
  11,604
  12,170
  12,765
Working capital, $m
  -19
  -20
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
  -59
  -62
  -65
Total debt, $m
  2,637
  2,730
  2,833
  2,946
  3,068
  3,200
  3,342
  3,494
  3,656
  3,829
  4,013
  4,208
  4,416
  4,635
  4,867
  5,113
  5,372
  5,645
  5,934
  6,238
  6,559
  6,897
  7,252
  7,627
  8,021
  8,435
  8,872
  9,330
  9,813
  10,320
Total liabilities, $m
  3,191
  3,285
  3,388
  3,500
  3,622
  3,754
  3,896
  4,048
  4,211
  4,384
  4,568
  4,763
  4,970
  5,190
  5,422
  5,667
  5,926
  6,200
  6,489
  6,793
  7,114
  7,451
  7,807
  8,181
  8,575
  8,990
  9,426
  9,885
  10,367
  10,874
Total equity, $m
  1,133
  1,166
  1,203
  1,243
  1,286
  1,333
  1,383
  1,437
  1,495
  1,556
  1,622
  1,691
  1,764
  1,842
  1,925
  2,012
  2,104
  2,201
  2,304
  2,412
  2,525
  2,645
  2,772
  2,905
  3,044
  3,192
  3,346
  3,509
  3,681
  3,861
Total liabilities and equity, $m
  4,324
  4,451
  4,591
  4,743
  4,908
  5,087
  5,279
  5,485
  5,706
  5,940
  6,190
  6,454
  6,734
  7,032
  7,347
  7,679
  8,030
  8,401
  8,793
  9,205
  9,639
  10,096
  10,579
  11,086
  11,619
  12,182
  12,772
  13,394
  14,048
  14,735
Debt-to-equity ratio
  2.330
  2.340
  2.360
  2.370
  2.390
  2.400
  2.420
  2.430
  2.450
  2.460
  2.470
  2.490
  2.500
  2.520
  2.530
  2.540
  2.550
  2.560
  2.580
  2.590
  2.600
  2.610
  2.620
  2.630
  2.630
  2.640
  2.650
  2.660
  2.670
  2.670
Adjusted equity ratio
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  245
  258
  273
  289
  307
  326
  347
  369
  393
  419
  632
  661
  692
  726
  761
  798
  838
  879
  924
  971
  1,020
  1,072
  1,127
  1,185
  1,247
  1,311
  1,379
  1,451
  1,527
  1,606
Depreciation, amort., depletion, $m
  628
  639
  651
  665
  679
  694
  711
  729
  748
  768
  536
  559
  583
  609
  636
  665
  696
  728
  762
  797
  835
  875
  916
  960
  1,007
  1,055
  1,107
  1,160
  1,217
  1,277
Funds from operations, $m
  873
  898
  924
  954
  986
  1,020
  1,058
  1,098
  1,141
  1,187
  1,168
  1,220
  1,276
  1,335
  1,397
  1,463
  1,533
  1,607
  1,685
  1,768
  1,855
  1,947
  2,044
  2,146
  2,253
  2,367
  2,486
  2,612
  2,744
  2,883
Change in working capital, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
Cash from operations, $m
  874
  898
  925
  954
  986
  1,021
  1,059
  1,099
  1,142
  1,188
  1,169
  1,221
  1,277
  1,336
  1,399
  1,465
  1,535
  1,609
  1,687
  1,770
  1,857
  1,949
  2,046
  2,148
  2,256
  2,369
  2,489
  2,614
  2,747
  2,886
Maintenance CAPEX, $m
  -365
  -375
  -386
  -398
  -411
  -425
  -441
  -457
  -475
  -494
  -515
  -536
  -559
  -583
  -609
  -636
  -665
  -696
  -728
  -762
  -797
  -835
  -875
  -916
  -960
  -1,007
  -1,055
  -1,107
  -1,160
  -1,217
New CAPEX, $m
  -97
  -110
  -121
  -132
  -143
  -155
  -166
  -178
  -191
  -203
  -216
  -229
  -243
  -258
  -273
  -288
  -304
  -321
  -339
  -357
  -376
  -397
  -418
  -440
  -463
  -487
  -512
  -538
  -566
  -595
Cash from investing activities, $m
  -462
  -485
  -507
  -530
  -554
  -580
  -607
  -635
  -666
  -697
  -731
  -765
  -802
  -841
  -882
  -924
  -969
  -1,017
  -1,067
  -1,119
  -1,173
  -1,232
  -1,293
  -1,356
  -1,423
  -1,494
  -1,567
  -1,645
  -1,726
  -1,812
Free cash flow, $m
  412
  414
  418
  425
  432
  441
  452
  463
  476
  491
  438
  456
  475
  495
  517
  540
  565
  592
  621
  651
  683
  717
  754
  792
  833
  876
  921
  969
  1,020
  1,074
Issuance/(repayment) of debt, $m
  80
  94
  103
  113
  122
  132
  142
  152
  162
  173
  184
  195
  207
  219
  232
  245
  259
  274
  289
  304
  321
  338
  356
  374
  394
  415
  436
  459
  482
  507
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  80
  94
  103
  113
  122
  132
  142
  152
  162
  173
  184
  195
  207
  219
  232
  245
  259
  274
  289
  304
  321
  338
  356
  374
  394
  415
  436
  459
  482
  507
Total cash flow (excl. dividends), $m
  491
  507
  521
  537
  554
  573
  593
  615
  639
  664
  622
  651
  682
  714
  749
  786
  825
  866
  909
  955
  1,004
  1,055
  1,109
  1,166
  1,227
  1,290
  1,357
  1,428
  1,502
  1,581
Retained Cash Flow (-), $m
  -30
  -33
  -37
  -40
  -43
  -47
  -50
  -54
  -58
  -61
  -65
  -69
  -74
  -78
  -82
  -87
  -92
  -97
  -102
  -108
  -114
  -120
  -126
  -133
  -140
  -147
  -155
  -163
  -171
  -180
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  29
  31
Cash available for distribution, $m
  461
  474
  485
  497
  511
  526
  543
  561
  581
  603
  557
  582
  608
  637
  667
  699
  733
  769
  807
  847
  890
  935
  983
  1,034
  1,087
  1,143
  1,203
  1,265
  1,331
  1,401
Discount rate, %
  9.10
  9.56
  10.03
  10.53
  11.06
  11.61
  12.19
  12.80
  13.44
  14.12
  14.82
  15.56
  16.34
  17.16
  18.02
  18.92
  19.86
  20.86
  21.90
  23.00
  24.15
  25.35
  26.62
  27.95
  29.35
  30.82
  32.36
  33.97
  35.67
  37.46
PV of cash for distribution, $m
  423
  395
  364
  333
  302
  272
  243
  214
  187
  161
  122
  103
  85
  69
  56
  44
  34
  25
  19
  13
  9
  6
  4
  3
  2
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Lamar Advertising Company is a publicly owned equity real estate investment trust. The firm primarily engages in selling advertising space on billboards, buses, shelters, benches, and logo plates. Lamar Advertising Company was founded in 1902 and is headquartered in Baton Rouge, Louisiana.

FINANCIAL RATIOS  of  Lamar Advertising Cl A (LAMR)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

LAMR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LAMR stock intrinsic value calculation we used $1541 million for the last fiscal year's total revenue generated by Lamar Advertising Cl A. The default revenue input number comes from 2017 income statement of Lamar Advertising Cl A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our LAMR stock valuation model: a) initial revenue growth rate of 2.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 9.1%, whose default value for LAMR is calculated based on our internal credit rating of Lamar Advertising Cl A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Lamar Advertising Cl A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of LAMR stock the variable cost ratio is equal to 60.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $161 million in the base year in the intrinsic value calculation for LAMR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Lamar Advertising Cl A.

Corporate tax rate of 27% is the nominal tax rate for Lamar Advertising Cl A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the LAMR stock is equal to 0.6%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for LAMR are equal to 236.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Lamar Advertising Cl A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for LAMR is equal to -1.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1103 million for Lamar Advertising Cl A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 98 million for Lamar Advertising Cl A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Lamar Advertising Cl A at the current share price and the inputted number of shares is $7.4 billion.

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COMPANY NEWS

▶ Lamar: 2Q Earnings Snapshot   [06:09AM  Associated Press]
▶ Q2 Earnings Outlook For Lamar Advertising   [Aug-07-18 02:54PM  Benzinga]
▶ 3 High-Yield Stocks Still Worth Buying   [May-21-18 12:41PM  Motley Fool]
▶ Lamar: 1Q Earnings Snapshot   [May-02-18 06:06AM  Associated Press]
▶ 6 Most Undervalued Stocks In Chuck Akre's Portfolio   [Apr-19-18 10:27AM  Benzinga]
▶ Lamar reports 4Q results   [06:29AM  Associated Press]
▶ Billboards to Hotels: The Right REITs for Growth & Income   [Feb-05-18 05:59AM  Investopedia]
▶ Lamar reports 3Q results   [Nov-06-17 06:09AM  Associated Press]
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