Lamar's higher profit target comes with a bigger adjustment
Stronger ad sales support the billboard owner's outlook. Bigger adjustments also help lift one annual profit target while another falls.
Lamar Advertising's billboard business is growing, and management has raised the annual profit target it highlights to investors. The forecast tables show an unusual split: one profit measure is rising while the less-adjusted measure beneath it is falling.
The company now expects adjusted funds from operations, or AFFO, of $8.87 to $8.97 per diluted share for 2026. Its original August range was $8.75 to $8.90.
Research by Ticker Byline shows that larger adjustments explain the difference between that upgrade and the lower forecast for funds from operations, or FFO. At the midpoints, projected AFFO rises $10.7 million while projected FFO falls $12.35 million.
What changed inside the forecast
Lamar operates as a real estate investment trust. FFO adds back real estate depreciation and removes property-sale gains, along with other specified adjustments. AFFO makes further changes, including adding back non-real-estate depreciation and stock-based pay and deducting maintenance spending.
| Measure | August | November |
|---|---|---|
| FFO | $885.6 to $890.6 | $874.3 to $877.3 |
| Non-real-estate depreciation and amortization added back | $15.0 | $36.0 |
| AFFO | $903.0 to $918.0 | $916.2 to $926.2 |
The larger depreciation addback is the biggest change connecting the two profit forecasts. Expected stock-based compensation also increased, while smaller adjustments moved the other way.
Lamar's quarterly report attributes the increase in actual depreciation and amortization mainly to disposing of previously capitalized software implementation costs, as well as acquisitions and investment in assets.
The advertising growth is real, too
Revenue rose to $624.5 million in the third quarter from $585.5 million a year earlier. After rebasing the earlier period for acquisitions and disposals, growth was 6.2%. Chief executive Sean Reilly credited national advertisers, digital displays and political spending, and said the fourth quarter had started strongly.
Operating cash flow increased to $284.1 million from $235.7 million. Lamar's own free-cash-flow measure, which adjusts operating cash flow for working capital and other items as well as deducting capital spending, rose to $220.1 million from $189.2 million.
Quarterly FFO grew 2.2%, while AFFO grew 10.1%. Reported net income reached $165 million, up from $144.1 million, and included a larger gain on asset disposals. The higher adjusted forecast therefore sits alongside stronger sales and cash generation, but it also excludes more costs.
That distinction matters when judging the upgrade. The Lamar Advertising company profile tracks the profit measures alongside dividends, debt and completed acquisitions. The next results will show how the advertising business performs and whether the larger adjustments persist.