Critical Review: Lamar Advertising (NASDAQ:LAMR) versus Digital Realty Trust (NYSE:DLR)

Lamar Advertising (NASDAQ:LAMR) and Digital Realty Trust (NYSE:DLR) are both large-cap real estate companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, valuation, earnings, analyst recommendations, risk and institutional ownership.

Volatility and Risk

Lamar Advertising has a beta of 1.2, meaning that its stock price is 20% more volatile than the S&P 500. Comparatively, Digital Realty Trust has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Lamar Advertising and Digital Realty Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lamar Advertising	0	3	2	0	2.40
Digital Realty Trust	0	6	25	2	2.88

Lamar Advertising presently has a consensus target price of $161.00, indicating a potential upside of 2.20%. Digital Realty Trust has a consensus target price of $221.35, indicating a potential upside of 22.80%. Given Digital Realty Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Digital Realty Trust is more favorable than Lamar Advertising.

Earnings and Valuation

This table compares Lamar Advertising and Digital Realty Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lamar Advertising	$2.33 billion	6.88	$587.15 million	$5.48	28.75
Digital Realty Trust	$6.11 billion	10.94	$1.31 billion	$2.39	75.42

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

Profitability

This table compares Lamar Advertising and Digital Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lamar Advertising	23.90%	54.94%	8.04%
Digital Realty Trust	13.06%	3.81%	1.82%

Dividends

Lamar Advertising pays an annual dividend of $6.60 per share and has a dividend yield of 4.2%. Digital Realty Trust pays an annual dividend of $4.88 per share and has a dividend yield of 2.7%. Lamar Advertising pays out 120.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Digital Realty Trust pays out 204.2% 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 increased its dividend for 5 consecutive years. Lamar Advertising is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

93.8% of Lamar Advertising shares are held by institutional investors. Comparatively, 99.7% of Digital Realty Trust shares are held by institutional investors. 15.2% of Lamar Advertising shares are held by insiders. Comparatively, 0.2% of Digital Realty Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

About Lamar Advertising

Lamar Advertising Company operates as an outdoor advertising company in the United States and Canada. The company owns and operates billboards, logo signs, and transit advertising displays, as well as rents space for advertising on billboards, buses, shelters, benches, logo plates, and in airport terminals. Lamar Advertising Company was founded in 1902 and is headquartered in Baton Rouge, Louisiana.

About Digital Realty Trust

Digital Realty Trust, Inc. operates as a real estate investment trust, which engages in the provision of data center, colocation and interconnection solutions. It serves the following industries: artificial intelligence (AI), networks, cloud, digital media, mobile, financial services, healthcare, and gaming. The company was founded on March 9, 2004, and is headquartered in Dallas, TX.