Why Lamar Advertising Is Poised to Plunge

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, outdoor advertising company Lamar Advertising (NASDAQ: LAMR  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Lamar, and see what CAPS investors are saying about the stock right now.

Lamar facts

   

Headquarters (founded)

Baton Rouge, La. (1989)

Market Cap

$3.6 billion

Industry

Advertising

Trailing-12-Month Revenue

$1.2 billion

Management

CEO Sean Reilly (since 2011)

CFO Keith Istre (since 1989)

Return on Equity (average, past 3 years)

(1.9%)

Cash/Debt

$38.5 million / $2.1 billion

Competitors

CBS Outdoor

Clear Channel Outdoor Holdings

JCDecaux

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 55% of the 186 members who have rated Lamar believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, Clint35, highlighted Lamar's valuation as particularly unsustainable:

Way too expensive! Sales are growing at a little under 3.5%. ... Let's say sales do pick up and they get to a point where they're earning $2 per share. Divide the share price $38.64 by $2 that gives you a P/E of around 19. That's still too expensive in my opinion. But if the P/E and sales growth get to where they're matching that's when I'll end this call. Until then, I can't picture this one beating the market. By the way, they also have a lot of debt.

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