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oOh!Media Ltd reports results: Are investors missing a buying opportunity?

The share price of outdoor advertising asset owner oOh!Media Ltd (ASX: OML) hardly budged on Monday after the release of its inaugural full year profit result despite beating its prospectus forecasts.

Here are some of the highlights from the release:

  • Pro forma revenue increased 7.1% (1% ahead of the prospectus forecast) to $260.8 million
  • Pro forma adjusted net profit after tax came in 4% above prospectus at $18.2 million
  • Pro forma adjusted earnings per share (EPS) were 12.1 cents per share (cps), beating the prospectus number by 3.9%
  • Digital revenues continued to gain traction, reaching 23.2% of total pro forma revenue

After listing at $1.93 in December 2014, oOh!Media’s stock is now trading at $2.25 providing IPO investors with outperformance of around 5% against the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

No analysis of oOh!Media would be complete without a comparison with its listed peer APN Outdoor Group Ltd (ASX: APO). Interestingly, both companies just listed on the ASX in the later part of calendar year 2014. Since their respective listings, both stocks have performed well, with shareholders who partook in the initial public offerings (IPOs) sitting on capital gains of 19% (in the case of oOh!Media) and 7% (in the case of APN Outdoor).

In now a good time to buy?

Despite solid post-IPO performance there could be further gains in store for long-term shareholders thanks to the dynamics of the outdoor advertising industry.

Management has multiple strategies for growing oOh!Media’s business. These plans include further digitalising the asset base, maximising inventory utilisation, cross-selling and evaluating acquisition opportunities.

At the full year results presentation, management also re-confirmed prospectus pro forma adjusted revenues, earnings and EPS of $266.4 million, $22.2 million and 14.6 cps respectively. Based on these forecasts, the stock is currently trading on a 2015 price-to-earnings ratio of 15.4x.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned.

 

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