The advertising industry is expected to grow due to the adoption of innovative techniques and the growing use of mobile devices. Therefore, I think advertising stocks Ziff Davis, Inc. (ZD), Criteo S.A. (CRTO), and Cimpress plc (CMPR) might be worth adding to your watchlists.
Multiple media experienced expansion in ad revenues in 2022. Cinema recorded an exceptional growth rate, presumably due to the easing of COVID-19-related mobility restrictions. Projections indicate a promising future for the U.S. ad industry, with anticipated revenue growth of 2.6% in 2023, reaching an all-time high of $352 billion.
Moreover, the global smart advertising market is projected to grow due to increased demand for personalized advertisements across industrial units. In addition, the growing use of mobile devices has encouraged companies to adopt more technologically advanced advertising methods.
The global smart advertising market is predicted to grow to around $1.87 trillion by 2030 at a CAGR of approximately 20.4%.
Also, Augmented Reality (AR) and Virtual Reality (VR) are often regarded as the two most important technology platforms worldwide for marketing enterprises. These platforms are expected to provide innovative ways for advertising techniques and improve employees’ practical knowledge, allowing them to think creatively. Therefore, they are projected to become an important market trend in the future.
Take a look at the stocks mentioned above:
Ziff Davis, Inc. (ZD)
ZD provides internet information and services in the United States, Canada, Ireland, and internationally. It operates in two segments, Digital Media, and Cybersecurity, and Martech.
ZD’s trailing-12-month EBITDA margin of 32.42% is 79.6% higher than the 18.05% industry average. Its trailing-12-month gross profit margin of 85.89% is 72.6% higher than the 49.76% industry average.
During the fiscal first quarter ended March 31, 2023, ZD’s total revenues came in at $307.42 million. Total operating costs and expenses decreased 181.3% year-over-year to $280.83 million, and adjusted EBITDA came in at $94.33 million. Adjusted net income came in at $51.73 million.
Analysts expect ZD’s revenue for the fiscal second quarter ending June 2023 to be $324.40 million. Its EPS is expected to be $1.23 for the same quarter. Also, it has surpassed EPS estimates in three of the trailing four quarters, which is remarkable.
Shares of ZD have gained 15.6% over the past month to close the last trading session at $70.10.
ZD’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade for Quality and Growth. It is ranked #2 out of 20 stocks in the Advertising industry.
Beyond what is stated above, we’ve also rated ZD for Momentum, Sentiment, Value, and Stability. Get all ZD ratings here.
Criteo S.A. (CRTO)
Headquartered in Paris, France, CRTO provides marketing and monetization services on the open Internet in North and South America, Europe, the Middle East, Africa, and the Asia-Pacific.
On June 15, 2023, CRTO announced the launch of Commerce Grid, a first-of-its-kind supply-side platform (SSP) purpose-built for agencies and publishers looking to efficiently connect media and commerce with programmatic.
CRTO’s trailing-12-month asset turnover ratio of 0.95x is 92.5% higher than the 0.49x industry average. Its trailing-12-month CAPEX/Sales of 5.69% is 41.9% higher than the 4.01% industry average.
CRTO’s revenue came in at $445 million in the fiscal first quarter that ended March 31, 2023. Its gross profit came in at $182 million. Also, its adjusted EBITDA came in at $39 million, and adjusted EPS came in at $0.46.
Street expects CRTO’s revenue for the fiscal second quarter ending June 2023 to increase 7.7% year-over-year to $231.03 million. Its EPS is expected to be $0.45 for the same quarter. Also, it has surpassed EPS estimates in three of the trailing four quarters.
The stock has gained 39.8% over the past year to close the last trading session at $33.61.
CRTO’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
CRTO has an A grade for Value. It is ranked #3 in the same industry.
Click here to see the additional POWR Ratings for CRTO (Sentiment, Growth, Momentum, Quality, and Stability).
Cimpress plc (CMPR)
Based in Dundalk, Ireland, CMPR provides various mass customization of printing and related products in North America, Europe, and internationally. The company operates through five segments: Vistaprint; PrintBrothers; The Print Group; National Pen; and All Other Businesses.
CMPR’s trailing-12-month gross profit margin of 46.56% is 56.1% higher than the 29.83% industry average. Its trailing-12-month asset turnover ratio of 1.50x is 88% higher than the 0.80% industry average.
CMPR’s revenue increased 12.9% year-over-year to $742.16 million in the fiscal third quarter, which ended March 2023. Its net loss decreased 28.7% year-over-year to $49.81 million. Also, net loss per share attributable to CMPR decreased 31.6% year-over-year to $1.88.
CMPR’s revenue for the fiscal fourth quarter ending June 2023 is expected to increase 9.8% year-over-year to $793.45 million. Its EPS is expected to be $0.24 for the same quarter.
The stock has gained 131.4% over the past nine months to close the last trading session at $58.75.
CMPR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
CMPR also has an A grade for Growth and a B in Quality. It is ranked first in the same industry.
To access additional ratings for CMPR’s Value, Momentum, Stability, and Sentiment, click here.
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ZD shares were trading at $70.51 per share on Friday morning, up $0.41 (+0.58%). Year-to-date, ZD has declined -10.86%, versus a 16.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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