The proliferation of e-commerce and consumers' different choices inclining toward advertisement with the message, along with the integration of advanced technologies, are the major factors fuelling the global AdTech market growth. The global AdTech market is expected to grow at a solid CAGR of 22.4% by 2034.
Additionally, the ongoing transition from traditional to online advertising serves as a key driver of market growth. The widespread availability of the Internet and the growing number of online users have enabled advertisers to target larger audiences.
As people increasingly rely on the Internet for work, entertainment, and social interactions, digital platforms offer more opportunities for advertisers to connect with their target audience effectively.
Against this backdrop, let’s compare two established AdTech stocks to analyze which AD Tech stock captures more value: Clear Channel Outdoor Holdings, Inc. (CCO) and Taboola.com Ltd. (TBLA).
The Case for Clear Channel Outdoor Holdings, Inc. Stock
With a $758.07 million market cap, Clear Channel Outdoor Holdings, Inc. (CCO) operates as an out-of-home advertising company in the United States, Europe, and internationally. It operates through America, Airports, Europe-North, and other segments.
CCO’s stock has gained 12.3% over the past six months to close the last trading session at $1.55.
In terms of forward P/S, CCO’s 0.34x is 74.6% lower than the 1.34 industry average. However, its 13.79x forward EV/EBITDA is 71.2% higher than the 8.05x industry average.
CCO’s revenue for the third ended September 30, 2024, increased 6.1% year-over-year to $559 million. Its adjusted EBITDA increased 2.6% year-over-year to $142.80 million. Its AFFO increased 9.1% year-over-year to $26.85 million. However, its net loss came in at $32.54 million.
Street expects CCO’s FFO and revenue for the fiscal year ending December 2024 to increase 121.7% and 5.6% year-over-year to $0.10 and $2.25 billion, respectively. Moreover, the company surpassed revenue and EPS estimates in each of the four trailing quarters.
CCO’s POWR Ratings reflect mixed prospects. It has an overall rating of C, which translates to a Neutral in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CCO is ranked #13 out of 15 stocks in the Advertising industry. It has a C grade for Growth, Value, Quality, and Stability. To see CCO’s Sentiment and Momentum ratings, click here.
The Case for Taboola.com Ltd. Stock
Valued at $1.34 billion by market cap, Taboola.com Ltd. (TBLA) and its subsidiaries operate an artificial intelligence-based algorithmic engine platform internationally. It offers Taboola, a platform that partners with websites, devices, and mobile apps to recommend editorial content and advertisements on the open web to users.
TBLA’s stock has gained 34.7% over the past year to close the last trading session at $16.49.
TBLA’s forward EV/EBITDA of 6.71x is 16.7% lower than the 8.05x industry average. Likewise, its 44.31x forward EV/EBIT is 176.4% lower than the 16.03x industry average.
TBLA’s revenues for the third quarter that ended September 30, 2024, increased 20.3% year-over-year to $433 million. Its gross profit grew 32% from the year-ago value to $132.90 million. The company’s adjusted non-GAAP net income came in at $22.20 million, up considerably from the prior year’s quarter.
Analysts expect TBLA’s revenue for the fourth quarter ending December 2024, to increase 13.5% year-over-year to $476.56 million. Its EPS is expected to grow 70.5% year-over-year to $0.15 for the same quarter. Moreover, the company surpassed revenue and EPS estimates in three of four trailing quarters.
TBLA’s robust fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, translating to a Strong Buy in our proprietary rating system.
TBLA has a B grade in Momentum, Stability, and Quality. It is ranked #2 in the same industry.
Click here for the additional POWR Ratings for TBLA (Momentum, Stability, and Quality).
Clear Channel Outdoor Holdings (CCO) vs. Taboola (TBLA): Which Ad Tech Innovator Captures More Value?
The AdTech industry is dynamic, with constant innovation in ad formats and platforms. The rise of social media, video advertising, and interactive ad formats has played a significant role in shaping the industry. Advertisers are constantly exploring new ways to engage audiences, and platforms are evolving to accommodate these changes, leading to new opportunities and challenges in the AdTech space.
Leading advertising companies, such as CCO and TBLA, stand to capitalize on the optimistic industry outlook. However, TBLA’s lower valuation and promising near-term outlook favor it as the better stock pick.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Advertising industry here.
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TBLA shares were trading at $4.07 per share on Tuesday afternoon, up $0.06 (+1.50%). Year-to-date, TBLA has declined -6.00%, versus a 28.27% 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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