The adoption of cutting-edge technologies, the growth of social media platforms, and ever-changing consumer behavior have led to the expansion of the advertising sector. Therefore, it could be wise to buy fundamentally strong advertising stocks - comScore, Inc. (SCOR), Tremor International Ltd (TRMR), Criteo S.A. (CRTO) and Cimpress plc (CMPR) for year-end gains.
Before diving deeper into the fundamentals of these stocks, let’s take a closer look at what’s shaping the industry’s prospects.
In the face of evolving consumer trends, the advertising industry remains crucial for businesses looking to connect with their audiences and maintain operational continuity. Advancements in technology enable advertisers to adapt and innovate according to evolving customer requirements.
The use of Artificial Intelligence (AI) and Augmented Reality/Virtual Reality (AR/VR) has not just revamped but elevated the advertising game. AI is helping tailor content for every individual, sparking more profound engagement, while AR/VR brings immersive experiences that captivate audiences.
Using such technologies is helping enhance brand awareness and enables more efficient targeting of consumers, leading to improved campaign performance.
Additionally, social media, now a hub for inspiration and entertainment, has emerged as a potent digital marketing channel, witnessing a surge in companies leveraging its promotional prowess. In 2023, social media ad spending was approximately $270 billion and is poised to exceed the $300 billion mark by 2024.
With the increasing use of smartphones and the proliferation of the Internet, the reach of the advertising industry has expanded significantly, helping businesses reach newer audiences and geographies. The mobile advertising market is projected to grow at a CAGR of 23.1% to reach $750.21 billion by 2030.
The global smart advertising market is predicted to grow to around $1.87 trillion by 2030 at a CAGR of approximately 20.4%.
Considering these conducive trends, let’s take a look at the fundamentals of the three best Advertising stocks, starting with number 4.
Stock #4: comScore, Inc. (SCOR)
SCOR operates as an information and analytics company that measures audiences, consumer behavior, and advertising across media platforms. The company offers ratings and planning products and services, including Media Metrix Multi-Platform and Mobile Metrix, Video Metrix, Plan Metrix, Total Home Panel Suite, CCR, XMedia Enhanced, Comscore marketing solutions, Lift Models, Survey Analytics, and Activation Solutions.
In terms of forward non-GAAP P/E, SCOR’s 3.50x is 77.6% lower than the 15.62x industry average. Its 0.73x forward EV/Sales is 60.4% lower than the 1.85x industry average. Likewise, its 6.30x forward EV/EBITDA is 27.9% lower than the 8.73x industry average.
On December 18, 2023, SCOR announced a 1-for-20 reverse stock split of its common stock. The split, effective from December 20, 2023, follows Board and shareholder approval, reducing outstanding shares from approximately 95.1 million to 4.8 million.
The reverse stock split is intended to bring SCOR into compliance with Nasdaq's $1.00 per share minimum bid price requirement for continued listing and make the company's stock more attractive to a broader range of institutional and other investors.
For the fiscal third quarter that ended September 30, 2023, SCOR’s revenues amounted to $91 million. Its net income came in at $2.62 million, compared to a net loss of $52.38 million in the prior-year quarter. Its income from operations stood at $2.07 million, compared to a loss from operations of $56.44 million in the year-ago quarter. Additionally, its adjusted EBITDA increased 14.3% year-over-year to $13.40 million.
Analysts expect SCOR’s EPS for the quarter ending December 31, 2023, to increase 120% year-over-year to $0.20. Its revenue for the quarter ending March 31, 2023, increased 0.4% year-over-year to $91.89 million. Over the past three months, the stock has gained 16.8% to close the last trading session at $14.01.
SCOR’s POWR Ratings reflect its solid prospects. It has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Growth and a B for Value. It is ranked #4 out of the 17 stocks in the B-rated Advertising industry. To access the additional ratings of SCOR for Momentum, Stability, Sentiment, and Quality, click here.
Stock #3: Tremor International Ltd (TRMR)
Headquartered in Tel Aviv-Yafo, Israel, TRMR provides an end-to-end software platform that enables advertisers to reach relevant audiences and publishers. Its demand side platform (DSP) offers full-service and self-managed marketplace access to advertisers and agencies. Its sell supply side platform (SSP) provides access to data and a comprehensive product suite to drive inventory management and revenue optimization.
On December 15, 2023, TRMR's subsidiary, Nexxen, announced a strategic partnership between its supply-side platform, Nexxen SSP, and out-of-home (OOH) advertising group Taiv to offer connected TV (CTV) OOH opportunities.
This collaboration enhances TRMR's CTV capabilities, providing advertisers with immersive, highly impactful ad experiences in sports bars and restaurants, thereby expanding reach and visibility in unique social environments alongside premium live sports content.
In terms of forward EV/Sales, TRMR’s 0.98x is 47.1% lower than the 1.85x industry average. Its 3.91x forward EV/EBITDA is 55.2% lower than the 8.73x industry average. Likewise, its 1.18x forward Price/Sales is marginally lower than the 1.19x industry average.
TRMR’s revenues for the fiscal third quarter ended September 30, 2023, increased 13% year-over-year to $80.09 million. Its adjusted EBITDA came in at $21.28 million. The company’s non-IFRS net income and EPS stood at $13.40 million and $0.09, respectively.
Street expects TRMR’s revenue for the quarter ending March 31, 2024, to increase 1.6% year-over-year to $72.90 million. Its EPS for the fiscal 2024 is expected to increase 14.5% year-over-year to $0.50. Over the past three months, the stock has gained 43.6% to close the last trading session at $5.17.
TRMR’s solid prospects are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Value and Sentiment. TRMR is ranked #3 in the same industry. Click here to access additional TRMR ratings for Growth, Momentum, Stability and Quality.
Stock #2: Criteo S.A. (CRTO)
Headquartered in Paris, France, CRTO provides marketing and monetization services on the open Internet. It offers Criteo Shopper Graph, which derives clients' proprietary commerce data, such as transaction activity on their digital properties. It also provides Criteo AI Engine solutions, dynamic creative optimization+, software systems and processes, and an experimentation platform.
On June 15, 2023, CRTO announced the introduction of Commerce Grid, a unique supply-side platform (SSP) tailored for efficient programmatic integration of media and commerce. Utilizing Commerce Audiences from CRTO's AI technology, the platform aims to capitalize on the growing commerce media trend, offering enhanced flexibility for agencies and improved performance for publishers.
According to McKinsey, commerce media has the potential to generate over $1.3 trillion of enterprise value in the U.S. by 2026. The introduction of Commerce Grid will further bolster its position in the growing commercial media opportunity.
On March 7, 2023, CRTO announced that it had acquired Australia-based Brandcrush, integrating its omnichannel retail media platform to offer a comprehensive solution for global retailers.
The acquisition strengthens CRTO's position in the Asia-Pacific retail media market, providing retailers with a purpose-built solution for managing media inventory across e-commerce and physical retail, and aligns with the company's strategy to lead in retail media on a global scale.
In terms of forward EV/EBITDA, CRTO’s 4.77x is 45.4% lower than the 8.73x industry average. Its 1.33x forward Price/Book is 33.3% lower than the 1.99x industry average. Likewise, its 6.70x forward Price/Cash Flow is 33.2% lower than the 10.03x industry average.
For the fiscal third quarter, which ended September 30, 2023, CRTO’s revenue increased 4.9% year-over-year to $469 million. Its adjusted net income increased 28.6% over the prior year quarter to $42.73 million. The company’s adjusted EPS came in at $0.71, representing an increase of 34% year-over-year. Additionally, its adjusted EBITDA increased 36.4% over the prior-year quarter to $68.44 million.
Analysts expect CRTO’s revenue and EPS for the quarter ending December 31, 2023, to increase 5.9% and 48.2% year-over-year to $300.09 million and $1.24, respectively. It surpassed the consensus EPS estimates in three of the trailing four quarters, which is impressive. Over the past month, the stock gained marginally to close the last trading session at $24.87.
CRTO’s POWR Ratings reflect this positive outlook. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has an A grade for Growth and Value and a B for Sentiment. Out of 17 stocks in the B-rated Advertising industry, it is ranked #2.
In addition to the POWR Ratings I’ve just highlighted, you can see CRTO’s ratings for Momentum, Stability, and Quality here.
Stock #1: Cimpress plc (CMPR)
Based in Dundalk, Ireland, CMPR provides various mass customization of printing and related products. The company operates through five segments: Vista, PrintBrothers, The Print Group, National Pen, and All Other Businesses. It offers printed and digital marketing products, Internet-based canvas-print wall décor, business signage, writing instruments, and various other services.
In terms of forward EV/Sales, CMPR’s 1.15x is 37.1% lower than the 1.84x industry average. Its 8.87x forward EV/EBITDA is 24.3% lower than the 11.72x industry average. Likewise, its 0.67x forward Price/Sales is 53.9% lower than the 1.45x industry average.
CMPR’s total revenue for the fiscal first quarter ended September 30, 2023, increased 7.7% year-over-year to $757.29 million. Its income from operations came in at $34.10 million, compared to a loss from operations of $17.97 million in the prior-year quarter.
The company’s adjusted EBITDA increased 94.6% over the prior year quarter to $88.74 million. Additionally, adjusted free cash flow came in at $10.93 million, compared to a cash outflow of $52.20 million in the year-ago quarter. Its net income attributable to CMPR came in at $4.55 million, compared to a loss of $25.44 million in the prior-year quarter.
Analysts expect CMPR’s revenue for the quarter ending December 31, 2023, to increase 5.6% year-over-year to $892.16 million. Its EPS for fiscal 2025 is expected to increase 34.2% year-over-year to $3.81. Over the past year, the stock has gained 208.8% to close the last trading session at $82.58.
It’s no surprise that CMPR has an overall rating of A, which translates to a Strong Buy in our POWR Ratings system.
It is ranked first in the same industry. It has an A grade for Sentiment and Quality and a B for Growth and Value. Click here to see CMPR’s Momentum and Stability ratings.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
CMPR shares were trading at $80.91 per share on Thursday afternoon, down $1.67 (-2.02%). Year-to-date, CMPR has gained 193.05%, versus a 26.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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