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Despite a successful year for the All Ordinaries Index (ASX:XAO), not all ASX All Ords stocks have shared in the upward momentum. One notable example is oOh!Media Ltd (ASX:OML), a prominent player in the outdoor advertising sector.
A year ago, oOh!Media shares were priced at $1.38. However, current trading reflects a decline of 5.4%, with shares now at $1.30. The situation appears even grimmer when examining performance over the course of 2024, with oOh!Media's stock down 20.6% from a starting point of $1.65 in January. Long-term investors have faced even more severe challenges; since reaching an all-time high of approximately $4.50 in 2016, the stock has plummeted by over 70%.
This lackluster performance has drawn attention from industry experts. Notably, Nick Sladen, co-portfolio manager of the LSN Capital Emerging Companies Fund, recently labeled oOh!Media as “the most undervalued” stock in the current market, despite acknowledging improvements within the company.
Sladen pointed out that the oOh!Media share price is trading at a notably low price-to-earnings ratio of 11, significantly below its historical trading levels prior to the COVID-19 pandemic. Given that oOh!Media holds a prominent position among the two major competitors in its field, Sladen argues that such a low valuation seems unjustified.
Highlighting the company’s unique advertising real estate assets, which are strategically located along rail lines, in airports, on roads, and within office environments, Sladen emphasized the hard-to-replicate nature of these assets as a key strength. Additionally, he noted the company’s successful digitization of many billboards, a move that has enhanced yield and profitability while improving gross margins.
The fund manager anticipates continued success for oOh!Media, citing the potential for new contracts, including opportunities in the Sydney metro rail and street furniture in Woollahra. Such developments could positively impact the company’s financial outlook.
This optimistic perspective is likely to resonate with oOh!Media’s long-suffering shareholders, who have weathered significant price declines over the years. However, as with any stock, the market will ultimately determine the trajectory moving forward.
Currently, oOh!Media’s market capitalization stands at approximately $705.8 million, accompanied by a dividend yield of 4.02%. The company’s future will depend on how effectively it capitalizes on its assets and navigates the evolving landscape of the outdoor advertising industry.
