Death Care Index drops, now in negative position for the year
The 3rd Quarter of 2023 ended with the end of September and we thought it would be a good time to take a look at how the public companies in Death Care have held up over the course of the past quarter and past nine months. From our point of view it looks like investors are somewhat leery of funeral home operators as the stocks of the “Big 3” — Service Corporation International (SCI), Park Lawn Corporation, and Carriage Services have all dropped from the positions that they held at our last check on August 25.
In total, the Funeral Director Daily Death Care Index (DCI), which is a sum of owning one share of stock in each of the five publicly traded death care companies, has dropped from August 25, when it totaled $158.57 to a total of only $140.30 as of the Friday, October 6, close of the markets. That drop has also caused the DCI to drop to a negative gain/loss percentage for the year as the index stood at $153.53 on January 1, 2023. The drop to $140.30 from New Year’s Day’s $153.53 represents a drop of about 8.7% year-to-date.
In comparison, the major indexes of the markets, the Dow Jones Industrials, the Nasdaq composite, and the S&P 500 have all held on to positive gains for the year.
Here’s a comparison of how the companies and indices have fared year-to-date.
|Company||Oct 6 Price||Jan 1 Price||Plus/Minus %|
|Park Lawn Corp||13.34||19.11||-30.20%|
|S & P 500||4,308||3,840||12.10%|
Funeral Director Daily take: It is interesting to me to see the DCI companies that have gained or lost share price so far in 2023. The Big 3 funeral service and cemetery companies have all shown losses thus far while the DCI companies with less exposure to “funeral, cremation, and cemetery services” have gained. SCI, Park Lawn Corporation, and Carriage Services have all lost stock price while Matthews International — a supplier to the funeral industry, and Security National Financial Corporation — which has only minor “services” income among its larger insurance and mortgage business basis, have both grown in share price.
What does that tell me? Again, from my point of view I think it tells me that investors are somewhat concerned about the variables present in the “services” aspect of the profession right now. Those variables would include:
Death rates-– Post-pandemic will the numbers of deaths stay as high as they have been? Or will a “pull-forward” effect create less death numbers to the “services” industry over the next couple of years? Less deaths would certainly mean less revenues.
Interest Rates-– What effect will “higher for longer” inflation rates have on funeral service operators? Acquisition debt, and any other debt for that matter, that may be coming due will more than likely re-set at higher levels than previously carried by the operators.
Inflation-– There is some question if “services” operators will be able to pass on the higher costs of doing business caused by inflation to consumers in a world where less expensive options, like direct cremation, are becoming more readily available and accepted.
Again, simply from my point of view, I think investors in Death Care will be looking for some indications of these questions to be lifted before Death Care becomes one of the leaders in the investment community again.
On the other hand, in a world where we have seen venture investments slow down, there does not seem to be any shortage of venture or private equity firms willing to fund expansions into Death Care as we have seen with the Dignity plc purchase in Great Britain and the pending InvoCare purchase in the South Pacific. And, until recently withdrawn, we also saw a venture or private equity firm willing to join Park Lawn Corporation in its pursuit of competitor Carriage Services.
In any regard, it is an interesting time for the investing public.
Disclaimer — The author of this article holds stock positions with Service Corporation International, Park Lawn Corporation, and Security National Financial Corporation.
More news from the world of Death Care:
- Fowles Funeral Service boss honored after 63 years’ service. Norwich & Winsford Guardian (Great Britain)
- Texas family sues mortuary for allegedly dropping body down flight of stairs. USA Today
- Bryan cremation specialist retires after decade of service. Video story and print article. KBTX Channel 3 CBS — College Station (TX)
- Liberty funeral home celebrates a century of service. Courier Tribune (MO)
- TPG takes over InvoCare for $1.8 billion. Private Equity Insights (Great Britain)
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