Finance

Earnings Week is Here

Foundation Partners why I partnered

I’ve told readers many times that while I owned and operated a small funeral home – one that grew from 140 calls to about 325 calls – I always learned by reading and watching what the “Big Boys” in our industry were up to.  That meant, over the years, buying some stock and reading annual reports on Service Corporation International, Carriage Services, Stewart Enterprises, The Loewen Group, Hillenbrand Industries, and other public companies that came and went in the industry.

I don’t think you ever stop learning and reading those reports gave me an insight on what was happening in our industry.  I think that is still true and we will try to keep you informed as to what we find out in the next two weeks as the major United States death care companies report quarterly earnings and results.

Here is when several of the companies report earnings and will issue statements as well as what we will be looking for:

  • Matthews International — July 26.  We are interested in knowing how the Aurora Casket acquisition integration is working out for them.  Specifically, can an acquisition of a company with declining revenues in a declining industry (casket sales) be propped back up to be accretive to the bottom line of a multi-line corporation?  Hopefully, we can gain some insight with their report.  E-Trade average estimates quarterly earnings of $1.14 per share compared to last year’s $1.05 per share.

 

  • Carriage Services – July 26.  We believe that Carriage Services is being very selective in their acquisition process.  We also think that in a growing direct cremation/declining casketed services industry that is very prudent.  They recently announced a couple of acquisitions in the Mid-Atlantic region – an area of the country that is growing in population.  The challenge for Carriage, with so few acquisitions, and something we will look for as to the health of the company is “Same Unit year over year Sales”.  A declining number in that statistic would indicate problems caused by accelerated direct cremation growth.  E-Trade average estimates quarterly earnings of $0.37 per share as compared to last year’s $0.25 per share.

 

  • Service Corporation International – July 30.  SCI has some of the same challenges as Carriage Services in the same unit year over year growth.  We will also be looking at SCI’s cemetery sales – something that we think can be increased with increasing margins – that can be a positive growth indicator for the company.  Cemetery sales – and memorialization – is one area where we believe direct cremation can have a positive impact on sales growth.  The secret will be how to get families that scatter or bring ashes home to instead purchase grave spaces, columbariums, and monuments which when ashes are interred also allows the cemetery to get service income for interments, etc.  E-Trade average estimates quarterly earnings of $ 0.43 per share as compared to last year’s $ 0.35 per share.

 

  • Park Lawn Corporation – August 8.  A year ago we would not have mentioned Park Lawn Corporation with these other companies, but they have been on the fast-track in the acquisition realm – both funeral homes and cemeteries.  They are also trying to pay a monthly dividend while moving the company on a growth track — something that is not so easy to do.  Last I checked their Price/Earnings ratio was over 77 which indicates that investors are looking for huge top-line sales growth.  A failure to deliver on that growth would – in our opinion – knock down the stock price. E-Trade average estimates quarterly earnings of $ 0.21 per share as compared to last year’s $0.15 per share.

So there you have some idea of what we will be looking at and reporting on in the coming days and weeks.  A little note from a daily stock and news e-mail I get daily indicates that 87% of the U.S. corporations have reported earnings that exceeded Wall Street analysts estimates and the forecast for Q2 profits are up 20.8% from a year earlier.  It will be interesting to see where the death care companies come in according to those statistics.

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