OUTFRONT Media Inc. OUT has been awarded a long-term advertising contract by the Washington Metropolitan Area Transit Authority ("WMATA"). The move marks continuation of the company’s partnership with WMATA, opening up scope to capitalize from its presence in Washington, D.C., which is a vital and technologically-advanced market.
Particularly, the current contract has been operated by OUTFRONT Media since July 2014. The new contract, scheduled to start from July 2020, has an initial 10-year term. There are two subsequent five-year extensions as well at WMATA's option.
Jeremy Male, chairman and chief executive officer of OUTFRONT Media, said that “the addition of 1,500 new Liveboard digital displays to the Metrorail system will enhance both the ridership experience and the advertising opportunities.”
According to Nielsen Media Research, Washington, D.C. is the sixth largest market in the United States. Moreover, in 2018, the WMATA network of 1,100 railcars and 1,648 buses supported 295 million passenger trips. Therefore, this long-term advertising contract offers decent cope to OUTFRONT Media to bolster its top line and the digital spreading out complements similar media networks in New York City, Boston, Minneapolis and San Francisco.
OUTFRONT Media is focused on increasing its digital-display assets at prime locations. It has resorted to acquisitions, expansion and conversion of static billboard displays to digital, which bode well for long-term growth. With the expansion of footprint and technology platform, the company is banking on out-of-home (OOH) advertising. It also has sufficient balance-sheet strength to pursue growth opportunities. Its geographically-diversified portfolio is benefiting from upbeat trends in national advertising. Yet, elevated capital expenditures due to inorganic growth activities affect the company’s performance.
This Zacks Rank #3 (Hold) stock has gained 44.1% so far this year, outperforming 19% growth recorded by the industry.
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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.
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