The expansion of the advertisement industry stems from technological advancements, refined audience targeting, and augmented investments in both digital and traditional media platforms. Considering this, esteemed Wall Street ad stocks comScore, Inc. (SCOR), Criteo S.A. (CRTO), and Cimpress plc (CMPR) could make additions to one’s portfolio.
Before delving into the featured stocks, let's examine the dynamics of the advertising sector.
The proliferation of smartphones as essential tools for communication, entertainment, and information consumption has prompted advertisers to seize the opportunity to reach a broad and varied audience. The extensive mobile user base offers a fertile environment for dynamic targeted advertising, facilitating real-time engagement between businesses and consumers.
Globally, the widespread embrace of mobile technology has elevated mobile advertising to a pivotal platform for audience outreach and interaction. Fact.MR's recent research reveals that the global mobile advertising market will reach $184.01 billion in 2024, with a projected 9.4% CAGR, foreseeing a valuation of $450.02 billion by 2034.
Furthermore, harnessing micro-influencers in advertising could prove advantageous for the industry. These influencers, targeting specific audiences, foster genuine engagement, boosting brand credibility and outreach. Cost-efficient partnerships result in substantial ROI, nurturing authentic connections between brands and consumers, thus driving sectoral expansion.
Moreover, substantial media prospects are anticipated for advertisers stemming from major cyclical sporting and political events such as UEFA EURO2024 and the United States presidential election. This will propel heightened investments both domestically and internationally, presenting lucrative opportunities for marketers to capitalize on.
Digital advertising is poised to remain the primary catalyst for global ad spend growth, attracting the majority of incremental investments, amounting to an additional $27.1 billion this year. It is projected to maintain an upward trend, reaching $442.6 billion by 2024, comprising 58.8% of total global advertising expenditure.
Additionally, TV is anticipated to rebound with a growth rate of 2.9%, securing a 23.0% share of ad spend by 2024. Meanwhile, print advertising expenditure is forecasted to hit $10.36 billion this year, with magazine advertising leading as the largest segment at $5.34 billion.
Furthermore, the integration of AI and advanced technology in advertising is driving expansion by enhancing campaign optimization, audience targeting, and content personalization. Advertisers can harness data-driven insights and automation to achieve unprecedented efficiency and effectiveness.
According to the latest dentsu Global Ad Spend Forecasts, advertising expenditure is set to increase by $33.0 billion in 2024, reaching a total of $752.8 billion. This marks a notable 4.6% year-over-year growth for the advertising industry, surpassing the pace observed in 2023.
In light of these encouraging trends, let’s look at the fundamentals of the three best Advertising stocks, beginning with number 3.
Stock #3: comScore, Inc. (SCOR)
SCOR operates as an information and analytics firm, evaluating audience and consumer behavior and advertising across diverse media platforms. It provides ratings, planning solutions, and products for measuring movie viewership and box office results, utilizing real-time or near-real-time capture of ticket sales data.
On January 23, 2024, SCOR announced a multi-year agreement with Nexstar Media Group, Inc. (NXST) for cross-platform audience measurement. SCOR will serve as a measurement partner for NXST, supplying vital metrics across its local TV, broadcast, network, and digital ventures. This would significantly expand SCOR's prospects.
In terms of forward non-GAAP P/E, SCOR is trading at 4.45x, 70.5% lower than the industry average of 15.09x. Its forward EV/Sales of 0.78x is 59.1% lower than the 1.91x industry average. Moreover, the stock’s forward EV/EBITDA of 6.72x is 21.7% lower than the industry average of 8.57x.
For the fiscal 2023 third quarter that ended September 30, 2023, SCOR’s income from operations stood at $2.07 million, compared to a loss of $56.44 million in the prior year’s period. Moreover, the company’s net income came in at $2.62 million, compared to a net loss of $52.38 million in the previous year’s quarter.
Additionally, SCOR’s adjusted EBITDA grew 14.3% year-over-year to $13.40 million. As of September 30, 2023, the company’s cash and cash equivalents amounted to $30.07 million, up from $20.44 million as of December 31, 2022.
Analysts expect SCOR’s revenue to increase 4.4% year-over-year to $390.37 million for the fiscal year ending December 2024. Shares of SCOR have gained 11.3% over the past six months to close the last trading session at $17.80.
SCOR’s solid outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
SCOR has an A grade for Growth and a B for Value. It is ranked #4 out of 16 stocks within the Advertising industry.
In addition to the POWR Ratings I’ve highlighted, you can see SCOR’s Momentum, Stability, Sentiment, and Quality ratings here.
Stock #2: Criteo S.A. (CRTO)
Based in Paris, France, CRTO is a technology firm specializing in marketing and monetization services across the open Internet. It also provides real-time advertising technology and trading infrastructure, empowering media owners, agencies, performance advertisers, and third-party AdTech platforms with advanced media buying, selling, and packaging capabilities.
In terms of forward non-GAAP P/E, the stock is trading at 9.84x, 34.8% lower than the industry average of 15.09x. Its forward EV/Sales of 1.46x is 23.2% lower than the 1.91x industry average. Additionally, CRTO’s forward EV/EBITDA of 4.96x is 42.1% lower than the industry average of 8.57x.
For the fiscal 2023 fourth quarter that ended September 30, 2023, CRTO’s revenue marginally increased year-over-year to $566.30 million. Its gross profit grew 12.2% from the year-ago value to $276.63 million.
In addition, the company’s net income and net income allocated to shareholders per share rose 286.6% and 308% from the prior year’s period to $62.05 million and $1.02, respectively.
The consensus revenue estimate of $1.07 billion for the fiscal year ending December 2024 indicates a 5% year-over-year growth. Likewise, the consensus EPS estimate of $3.24 for the ongoing year reflects a 1.9% year-over-year increase. Furthermore, the company topped the consensus revenue and EPS estimates in all four trailing quarters.
Over the past month, the stock has gained 32.1% to close the last trading session at $31.88.
CRTO’s robust fundamentals are apparent in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
CRTO has an A grade for Growth and Value and a B for Sentiment. It is ranked #2 out of 16 stocks within the same industry.
Click here to access additional CRTO ratings for Momentum, Stability, and Quality.
Stock #1: Cimpress plc (CMPR)
CMPR, headquartered in Dundalk, Ireland, offers diverse mass customization services for printing and related items. It also produces and promotes custom writing instruments, promotional products, apparel, and gifts worldwide. The company operates through five segments, Vista; PrintBrothers; The Print Group; National Pen; and All Other Businesses.
In terms of forward EV/Sales, CMPR is trading at 1.17x, 36% lower than the industry average of 1.83x. Its forward EV/EBITDA of 8.39x is 29.5% lower than the 11.90x industry average. Furthermore, the stock’s forward Price/Sales of 0.73x is 50.1% lower than the industry average of 1.46x.
For the fiscal 2024 second quarter that ended December 31, 2023, CMPR’s revenue increased 9% year-over-year to $921.36 million. Its income from operations rose 220.7% from the year-ago value to $107.68 million.
Additionally, net income and net income per share attributable to CMPR stood at $58.11 million and $2.14, respectively, compared to a net loss and loss per share of $140 million and $5.35 in the prior year’s period.
Analysts expect CMPR’s revenue to increase 7% year-over-year to $3.29 billion for the fiscal year ending June 2024. The company’s EPS for the same period is expected to stand at $3.18. CMPR’s shares have gained 25.3% over the past month and 142.4% over the past year, closing the last trading session at $89.98.
CMPR’s strong prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
CMPR has an A grade for Quality and a B for Growth, Value, and Sentiment. It has topped the 16-stock Advertising industry.
Click here to access the additional CMPR ratings (Momentum and Stability).
What To Do Next?
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CMPR shares were trading at $90.78 per share on Thursday afternoon, up $0.80 (+0.89%). Year-to-date, CMPR has gained 13.40%, versus a 5.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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