Shares of OUTFRONT Media OUT have gained 21.9% in the past six months, outperforming its industry’s growth of 10.7%.

This New York-based advertising real estate investment trust’s (REIT) diverse portfolio of advertising sites and large-scale presence, efforts to bolster its digital presence and strategic acquisitions over the years have enabled it to ride the growth curve so far.

This month, the company reported third-quarter 2024 adjusted funds from operations per share of 48 cents, which surpassed the Zacks Consensus Estimate of 43 cents. The metric increased 4.3% from the prior-year quarter. Results reflected higher average revenue per display (yield) across its portfolio and lower operating expenses.

Image Source: Zacks Investment Research

Let us now find out the possible factors behind the surge in the stock price.

OUT’s Large-Scale Presence

OUTFRONT Media enjoys a geographically diverse portfolio of advertising sites, with a presence across the largest markets in the United States. The company’s large-scale presence paves the way for its clients to reach a national audience and provides the flexibility to tailor campaigns to specific regions or markets. This OOH advertising company offers communication and advertising services to several transit authorities.

The company caters to various industries, including professional services, healthcare/pharmaceuticals and retail. Hence, its large-scale presence and diversified portfolio with respect to geography and industry make its revenues less volatile.

OUT’s Digital Billboard Portfolio

OUTFRONT Media is making efforts to convert its business from traditional static billboard advertising to digital displays. This has helped the company expand the number of new advertising relationships, providing scope to boost its digital revenues.

In the first nine months of 2024, the company built or converted 64 new digital billboard displays in the United States. Moreover, it built, converted or replaced 5,717 digital transit and other displays in the United States in the same period. Such efforts are likely to pay off well in the upcoming period, positioning the company well for growth.

The company has also made strategic investments in its digital billboard portfolio over the years, and these investments have started reaping benefits. Its total digital billboard displays reached 1,923 at the end of the third quarter of 2024.

OUT’s Favorable OOH Advertising

The company is leveraging out-of-home (OOH) advertising, which has a lower cost compared with other forms of media, to drive its performance. In the upcoming years, higher technology investments are expected to provide further support to OOH advertising. Capitalizing on this, the company is expanding its footprint and providing unique technology platforms to marketers to tap growth opportunities.

OUT’s Strategic Acquisitions

OUTFRONT Media is also focused on enhancing its portfolio quality via strategic acquisitions.  In the first nine months of 2024, the company acquired several assets for approximately $11.2 million. In 2023, it acquired several assets for around $33.7 million. With such expansion efforts, it remains well-poised to grow over the long term.

Risks Likely to Affect OUT’s Positive Trend

OUTFRONT Media faces competition from other outdoor advertisers. This is anticipated to affect the company’s pricing power in the market.

Stocks to Consider

Some better-ranked stocks from the broader REIT sector are Welltower WELL and Iron Mountain IRM, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Welltower’s 2024 FFO per share is pinned at $4.26, suggesting year-over-year growth of 17%.

The Zacks Consensus Estimate for Iron Mountain’s 2024 FFO per share stands at $4.49, indicating an increase of 9% from the year-ago reported figure.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Iron Mountain Incorporated (IRM) : Free Stock Analysis Report

OUTFRONT Media Inc. (OUT) : Free Stock Analysis Report

Welltower Inc. (WELL) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research