By Michael McCarthy

Wow. 18% profit growth in the advertising industry. oOh!Media’s (OML) result this week is eye-catching. In perhaps even better news for the shareholders, the Out Of Home (O.O.H – get it?) advertising segment grew at 8.6%, while overall media advertising spend declined by 1.6%. OML’s a better performer in a sector that’s winning market share.

OML offers advertising on billboards, at shopping centres, airports and other locations, and related services. It’s important to note that the digital revolution is occurring in OOH as well. More than half of OML’s revenue now comes from digital formats. 

The $34 million profit unveiled on Monday was around 10% better than the consensus forecast. A key driver of this performance is lower than expected. It’s little wonder that the share price jumped by 8% to $4.36. Naturally, many analysts are now revising their estimates upward, and upgrades to recommendations are coming through. However, even after the post-result surge, the forward PE for OML is around 16x – in line with the average for the top 200 companies. Given the superior growth prospect, some will argue that this is cheap.

Investors concerned they may have missed the boat could also take comfort from the chart above. The jump only brings OML back to the mid-point of the 2017 trading range, and still well shy of the all-time high at $5.88. According to Bloomberg, the average price target is $5.08, with six buy recommendations, one hold and no sells. 

The long-awaited upswing in the advertising cycle remains elusive. Investors underweight growth exposures may see OML as a leader in the industry.