Critical Review: SBA Communications (NASDAQ:SBAC) versus Lamar Advertising (NASDAQ:LAMR)

Lamar Advertising (NASDAQ:LAMR – Get Rating) and SBA Communications (NASDAQ:SBAC – Get Rating) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, institutional ownership, risk and dividends.

Institutional & Insider Ownership

79.7% of Lamar Advertising shares are owned by institutional investors. Comparatively, 93.5% of SBA Communications shares are owned by institutional investors. 14.9% of Lamar Advertising shares are owned by company insiders. Comparatively, 1.6% of SBA Communications shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Lamar Advertising and SBA Communications’ top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lamar Advertising	$2.03 billion	4.57	$438.65 million	$4.15	21.95
SBA Communications	$2.63 billion	9.21	$461.43 million	$3.42	65.44

SBA Communications has higher revenue and earnings than Lamar Advertising. Lamar Advertising is trading at a lower price-to-earnings ratio than SBA Communications, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Lamar Advertising and SBA Communications’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lamar Advertising	20.59%	34.70%	6.63%
SBA Communications	13.91%	-7.01%	3.64%

Analyst Ratings

This is a breakdown of recent recommendations for Lamar Advertising and SBA Communications, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lamar Advertising	0	2	1	0	2.33
SBA Communications	0	2	13	1	2.94

Lamar Advertising presently has a consensus price target of $112.00, indicating a potential upside of 22.94%. SBA Communications has a consensus price target of $322.93, indicating a potential upside of 44.30%. Given SBA Communications’ stronger consensus rating and higher possible upside, analysts plainly believe SBA Communications is more favorable than Lamar Advertising.

Dividends

Lamar Advertising pays an annual dividend of $5.00 per share and has a dividend yield of 5.5%. SBA Communications pays an annual dividend of $3.40 per share and has a dividend yield of 1.5%. Lamar Advertising pays out 120.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SBA Communications pays out 99.4% 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 has raised its dividend for 3 consecutive years and SBA Communications has raised its dividend for 4 consecutive years.

Risk and Volatility

Lamar Advertising has a beta of 1.38, meaning that its stock price is 38% more volatile than the S&P 500. Comparatively, SBA Communications has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500.

Summary

SBA Communications beats Lamar Advertising on 11 of the 18 factors compared between the two stocks.

About Lamar Advertising

(Get Rating)

Lamar Advertising Co. engages in advertising services. The firm rents advertising space on billboards, buses, shelters, benches, logo plates, and in airport terminals. The company was founded in 1902 and is headquartered in Baton Rouge, LA.

About SBA Communications

(Get Rating)

SBA Communications Corp. is a real estate investment trust, which engages in the provision of wireless communications infrastructures. It operates through the following business segments: Domestic Site Leasing, International Site Leasing, and Site Development. The Domestic Site Leasing segment includes AT&T, Sprint, T-Mobile, and Verizon Wireless. The International Site Leasing segment acquires and develops towers. The Site Development segment is involved in consulting and construction activities. The company was founded by Steven E. Bernstein in 1989 and is headquartered in Boca Raton, FL.