DCI shines. . .outgains some composite indexes year to date
Funeral Director Daily’s Death Care Index (DCI), which is reflective of Death Care public companies public stock prices, has grown at a pace of about 9.7% for the first six weeks of calendar year 2023. That rate of increase surpasses both the Dow Jones Industrials and the S&P 500 indexes during the same time period. Only the NASDAQ has had greater growth in 2023.
This article will explore a little about each of the five DCI component companies and compare where they are in value as of Friday, February 10, 2023, as compared to where they were on the first day of January.
First of all, however, we will tell you that the DCI Index sits at $168.33 as of Friday, February 10. That is an uptick from where it sat on January 1 when the value was $153.47. (That is a corrected value from a previous article that reported an incorrect value for one of our component companies) As mentioned earlier, that uptick in value of the sum of one share of stock in each of the five component companies equals about 9.7%. For comparison sake, the indexes have grown by this much since January 1:
- Dow Jones: 2.17%
- NASDAQ: 11.96%
- S&P 500: 6.54%
The DCI total is a sum total of the share of one share of each of these five Death Care company stocks: Service Corporation International, Carriage Services, Park Lawn Corporation, Matthews International, and Security National Financial Corporation. Here is how those companies have performed, as measured by stock price, over the past 6 weeks.
|Company||Price Jan 1||Price Feb 10||Increase||P/E|
|Service Corp Intl||69.08||71.23||3.11%||16.9|
|Park Lawn Corporation||19.10||20.91||9.50%||26.9|
|Security National Financial||7.30||7.14||-2.20%||16.5|
Funeral Director Daily take: It’s been almost 50 years since I listened to my father at the kitchen table and learned about investments and the stock market. My dad’s big take when looking at stocks to buy was the company’s “Price to Earnings Ratio”, commonly called the P/E Ratio. You get that number by dividing the Earnings Per Share by the Stock Price. i.e. a company that earns $10 per share and has a price of $100 per share would have a P/E Ratio of 10.
The P/E Ratio is one indicator of how “pricey” the stock is. In Dad’s day, again 50 years ago, he strived to find stocks that had a P/E Ratio of 15 or under. That P/E Ratio indicated a “good” price on a solid profitable company. I would argue that investors have became a little less risk sensitive in the past 50 years and a stock with a P/E Ratio under 20 indicates a “good” price on a solid profitable company.
It’s also basically understood that companies with a better than average “growth potential” will have higher P/E ratios because investors believe that the sales and profits will “grow into” the price and eventually shrink the P/E ratio. For instance, Netflix has a P/E ratio of 30, Salesforce has a P/E Ratio of 33, and Amazon has a P/E ratio of 64. By most thinking, all solid, profitable companies who investors still believe have room to grow when looked at in terms of P/E ratios.
So, what interests me about P/E Ratios and Death Care companies? It’s interesting to look at three Death Care companies who virtually do the same thing — SCI, Carriage Services, and Park Lawn Corporation. They all operate funeral homes, cemeteries, crematories, and sell preneed. But, the investing public views them differently as to P/E Ratios. . . . The P/E Ratios of those companies ranges from 10.9 to 26.9 as of last Friday.
What does that tell us? It may show or reflect a history of how they have got to where they are or it may relate to how investors look at the company today. There is a great history to SCI. . . going back to February 1994 when their stock sold for $12.25 per share they have grown the stock valuation by an annual rate of 16.6% to get to the price of $71.23 today.
And, with a P/E of 26.9 does that indicate the the stock buying public believes that Park Lawn Corporation will grow into their stock price by having a “more aggressive” growth plan than the others? I don’t know, but it is one possibility of that high P/E Ratio.
In essence, stock prices are a snap-shot in time of how shareholders believe in a value of a company. From my point of view, I think all of the companies in the Death Care Index (DCI) show positive attributes. It’s up to an individual stockholder to do that measuring and make their investing selections. . . much like my dad did.
Disclaimer— The author of this article holds a stock position in the following companies: Service Corporation International, Park Lawn Corporation, Carriage Services, and Security National Financial Corporation.
More news from the world of Death Care:
- Church of England to consider greener alternatives to burial. The Guardian (Great Britain)
- Having any life insurance coverage is smart, but experts say you can do even better with 5 strategies. Personal Finance
- Funeral home finds woman breathing hours after being declared dead. Associated Press
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