Finance

Death Care outpaces Dow, Nasdaq, and S&P for first third of 2021

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For the first time that I can remember since I have followed what is termed the Death Care Index (DCI), the DCI for a period of time has outpaced the standard measures of America’s public companies, the Dow Jones Industrial Average, the Nasdaq, and the S & P 500.  For the time period of January 1, 2021, through the close of business last Friday, April 30, 2021, the Death Care Index has grown at a pace of 17.7%.

The DCI, which includes eight public companies with at least a portion of their business interests in the death care realm, saw seven of the eight companies with positive valuation moves for the first one-third of 2021.   The positive stock market moves among those seven companies range from a 1% increase with Security National Financial Corporation to a 40.7% increase for Matthews International.  Only StoneMor, Inc., which lost about 6.5% of its market value during that time period was on the negative side.

Other winners included Park Lawn Corporation, Hillenbrand, Carriage Services, Assurant, and Service Corporation International.

The public company barometers gained the following percentages from the period of January 1, 2021, to April 30, 2021:

  • Dow Industrials:  +10.7%
  • NASDAQ: + 8.3%
  • S&P 500:  +11.3%

Funeral Director Daily take:  This phenomena is of interest.  I’m somewhat at a loss to explain the reasoning as to “why now”?   However, I do believe that the Covid-19 pandemic has brought more interest to the death care industry than ever before.

It’s not that these are not good solid companies who, many will argue, should be growing in value.  When you look at Hillenbrand and Matthews, they’ve sold more caskets than ever before.  Park Lawn Corporation, Service Corporation, and Carriage Services are serving more client families than ever before.

My take is that the pandemic has shined a light on our industry and, even with some headwinds into us, the profession has shown that it can adapt when necessary.  I’m wondering if Wall Street maybe looked at the death care profession as “an old tired industry” that was never going to adapt to change.

Well, with the advent of social distancing rules and other Covid regulations, funeral homes adapted as they saw necessary.  I’m wondering if that gave Wall Street a different viewpoint of us “old, die in our ways” funeral directors?

Oddly enough, while Wall Street was not watching. . . . we’ve been changing too.  We continue to have valuable business assets in a culture that has changed from earth burial to cremation.  That’s maybe the biggest change. . . . but don’t forget, we’ve also changed in a world where church membership has dropped, where demographic patterns have changed, and where commerce is conducted more and more outside of brick and mortar establishments.

The funeral home industry still has its obstacles, like declining revenue per services staring at us, but we’ve also got some tailwinds such as a higher population and higher number of deaths in the decades to come.  Maybe the pandemic showed Wall Street our resourcefulness and made many see that there are solid “grind it out” companies that can be profitable over time and they may be a positive alternative to some of the boom or bust technology companies that enter the market every day.

In any regard, if you are a death care professional. . . . it was gratifying, at least for four months, to see others see our value also.

Disclaimer:  The author of this article holds stock positions in Service Corporation International, Park Lawn Corporation, StoneMor, Security National Financial Corporation, Service Corporation International, and Hillenbrand Industries.

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