– Clear Channel Outdoor – is the second largest out-of-home advertising company globally behind JCDecaux.
– Constantly trades at a discount to its US pureplay peers $LAMR and $OUT, partially due to high leverage.
– Catalysts for change – divestment of European business + undergoing industry/company transformation towards digital out-of-home advertising.
– The long-term growth and profitability profile is vastly underestimated due to a poor understanding of this transformation.
– Although only 4% of display inventory was converted to digital, digital revenue already represents 35% of the total.
– 20-40% IRR on each conversion with a very long runway ahead.
– Highly levered equity stub, but no maturities till 2025 and no covenants.
Valuation: Valuing US business in line with peers at 12xEBITDA and European LatAm operations at 8x, results in a $5.7/share target.
Exp. gain: Multi-bagger, 4x upside over the next few years.
Full $CCO write-up (free guest account required):