Public company valuations declined by about 4% during the second quarter of 2015 as can be seen in the Table Below. The three large public outdoor companies were valued at 4.3 times revenue and 13.6 times cash-flow at June 30, 2015. Clear Channel trades at a much lower valuation than Lamar or Outfront for four reasons: (1) It has a larger presence in competitive,volatile urban markets. (2) It has financial risk (debt/cashflow of 6.88, versus 3.56 for Lamar and 6.04 for Outfront). (3) It operates transit advertising which has lower margins. (4) It operates in foreign countries where lease rights aren’t predictable.
Enterprise Value as Revenue Multiple
| 15-Mar | 15-Jun | Change | |
| Clear Channel | 2.83 | 2.83 | |
| Lamar | 5.84 | 5.79 | |
| Outfront | 4.65 | 4.17 | |
| Average Revenue Multiple | 4.44 | 4.26 | -4% |
Enterprise Value as a Cashflow Multiple
| 15-Mar | 15-Jun | Change | |
| Clear Channel | 11.7 | 11.68 | |
| Lamar | 14.07 | 13.79 | |
| Outfront | 16.94 | 15.45 | |
| Average Cashflow Multiple | 14.24 | 13.64 | -4% |
Private outdoor companies tend to sell at a multiple of 4-6 times revenues or 8-10 times cash-flow. I have seen some higher transactions that that recently but they have been special cases – a high valuation for a static billboard location which can be converted to digital and a high valuation for a group of recently constructed signs which are still in the process of being leased. Don’t expect a high valuation if half your plant has been vacant for two years or if you have no digital conversion opportunities.
