Spirit Realty Capital (NYSE:SRC) & Lamar Advertising (LAMR) Critical Analysis
Spirit Realty Capital (NYSE: SRC) and Lamar Advertising (NASDAQ:LAMR) are both mid-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, valuation, profitabiliy, dividends and institutional ownership.
Spirit Realty Capital pays an annual dividend of $0.72 per share and has a dividend yield of 9.2%. Lamar Advertising pays an annual dividend of $3.32 per share and has a dividend yield of 4.6%. Spirit Realty Capital pays out 379.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lamar Advertising pays out 112.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Spirit Realty Capital has increased its dividend for 2 consecutive years. Spirit Realty Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk & Volatility
Spirit Realty Capital has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500. Comparatively, Lamar Advertising has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.
Earnings & Valuation
This table compares Spirit Realty Capital and Lamar Advertising’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Spirit Realty Capital||$667.15 million||5.69||$586.47 million||$0.19||41.27|
Spirit Realty Capital has higher revenue and earnings than Lamar Advertising. Lamar Advertising is trading at a lower price-to-earnings ratio than Spirit Realty Capital, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings for Spirit Realty Capital and Lamar Advertising, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Spirit Realty Capital||2||6||5||0||2.23|
Spirit Realty Capital currently has a consensus price target of $11.44, suggesting a potential upside of 45.92%. Lamar Advertising has a consensus price target of $79.67, suggesting a potential upside of 10.25%. Given Spirit Realty Capital’s higher possible upside, equities research analysts clearly believe Spirit Realty Capital is more favorable than Lamar Advertising.
This table compares Spirit Realty Capital and Lamar Advertising’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Spirit Realty Capital||13.28%||2.10%||1.01%|
Insider and Institutional Ownership
99.7% of Spirit Realty Capital shares are owned by institutional investors. Comparatively, 85.8% of Lamar Advertising shares are owned by institutional investors. 0.5% of Spirit Realty Capital shares are owned by insiders. Comparatively, 18.7% of Lamar Advertising shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Lamar Advertising beats Spirit Realty Capital on 9 of the 15 factors compared between the two stocks.
About Spirit Realty Capital
Spirit Realty Capital, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company’s operations are carried out through Spirit Realty, L.P. (the Operating Partnership). The Company invests in single-tenant, operationally essential real estate throughout the United States that is leased on a long-term, triple-net basis primarily to tenants engaged in retail, service and distribution industries. Single-tenant, operationally essential real estate consists of properties that are generally free-standing, commercial real estate facilities where its tenants conduct retail, service or distribution activities. as of December 31, 2012, the Company’s portfolio of 1,122 owned properties were leased to approximately 165 tenants.
About Lamar Advertising
Lamar Advertising Company is an outdoor advertising company in the United States. The Company operates in the advertising segment. The Company sells advertising on billboards, buses, shelters, benches and logo plates. It operates three types of outdoor advertising displays: billboards, logo signs and transit advertising displays. As of December 31, 2012, the Company owned and operated over 144,000 billboard advertising displays in 44 states, Canada and Puerto Rico, over 115,000 logo advertising displays in 22 states and the province of Ontario, Canada, and operated over 34,000 transit advertising displays in 15 states, Canada and Puerto Rico. In August 2014, the Company acquired the assets of Marco Outdoor Advertising, Inc.
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