Finance

Is Funeral Service an “Unappealing” Industry?

I’ve always been intrigued by the stock market.  I can remember over 50 years ago talking to my dad about what he thought was the end-all when looking at companies to potentially invest in.  For him it was the P/E ratio.  Dad always wanted the stock to have a P/E ratio of 15 or less before he would think of purchasing it.

Other people think of other things – some more intangible for the company.  It is interesting that today Seeking Alpha published an article that you can read here about Service Corporation International.  One of the attributes of the company, the article says, is that funeral service has a “wide moat”.  By that they mean that it is difficult for newcomers to get a hold on market share.

Another reason, however, that the author suggests for people to take a look at Service Corporation International is that the death care industry “is overlooked by the broader market due to its unappealing business model.  Yet this unappealing aspect is exactly what provides long-term investment opportunities that have the potential to outperform peers.”

Funeral Director Daily take:  I don’t know about you but it just rubs me the wrong way for someone who has never been in the trenches of funeral service to say what we do is an  “unappealing'” business.  The death care industry today is led by many fine people and the people on the front lines at funeral homes are there because they truly care about helping people.

Funeral service has came a long way since the impression was the old west “Mortimer” clasping his hands together and shoveling the grave to completion.

Some of the finest people I know work in the funeral industry. . .this article, while making some sense as to why someone may want to invest in Service Corporation, does most of the people in funeral service a dis-service.

Peter Lynch, who wrote the book One Up on Wall Street, considered funeral service people very professional and liked the aspect of funeral service as an investment because, among other things, growth was slow and steady.  That is how I continue to look at the investment opportunities within the death care realm.

Receive Funeral Director Daily posts by email
Never miss a Funeral Director Daily article. Submit this form and we'll send you every post by email.

 

Print Friendly, PDF & Email

One Comment

  1. Tom, it was interesting to here them use the word “wide moat”. Recently, I attended the Berkshire Hathaway shareholder meeting in Omaha. During Warren and Charlie’s thoughts, they discussed moats and how much they liked them, although Elan Musk disagrees, I like moats for companies like SCI and their tremendous scale. One thing that did make me ponder about though was that the funeral sector, in general, evokes everything that Warren likes when buying companies, however he doesn’t own any funeral stock. I’m curious as to why.

Leave a Comment

Your email address will not be published. Required fields are marked *

*