Lamar Advertising Company (LAMR Quick QuoteLAMR – Free Report) enjoys an impressive national footprint and holds a leading position as a provider of logo signs in the United States. Further, a diversified tenant base across various sectors bodes well for the company. However, stiff competition along with a high level of debt is a concern.

Lamar holds significant market share in the U.S. outdoor advertising business. The company offers its customers the largest network of digital billboards in the United States with more than 3,600 displays. It recently upgraded its 18 digital displays with LED digital displays from Daktronics (DAKT Quick QuoteDAKT – Free Report) . Lamar Advertising’s magnified focus on bolstering its digital capabilities augurs well for the company’s long-term growth.

The REIT operates in an industry that is characterized by high barriers to entry due to the permitting restrictions. This is because the company owns permits, which allow out-of-home advertising at each location, and these permits are the most prized assets gained in an acquisition.

However, with control on permits, inventory as well as intrusion from both local and national markets is restricted, providing the company with a solid competitive edge.

In the first half of the ongoing year, Lamar completed acquisitions for a total cash purchase price of $27.2 million. Though there was only modest investment activity in the second quarter, management has seen acceleration in the acquisition pipeline since May and anticipates that 2021 will be an active year on the acquisition front.

Shares of this Zacks Rank #3 (Hold) company have appreciated 27% in the past six months, outperforming the industry’s rally of 10.2%.

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While the company enjoys a significant market share in a number of its small- and medium-sized markets, stiff competition from other outdoor advertisers and other forms of media is a challenge for Lamar. The diversified competitors have an advantage of cross-selling complementary advertising products to advertisers. So, despite a significant portion of the company’s revenues coming in from local businesses, competition from national players might hinder its growth momentum.

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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.