Investors still reluctant with death care stocks

I happened to see that at the close of the markets Friday that funeral home and cemetery operator and consolidator Park Lawn Corporation’s stock closed down over 9% from the previous day.  I looked for news on the company but could not find anything in the public world that would cause a precipitous drop in valuation like that.

What it did cause me to do was take a look at all the other death care stocks that comprise the Funeral Director Daily Death Care Index (DCI) to see where they have went since we last checked in with the numbers on April 3, 2020.

What I did find out is that the eight stocks – Service Corporation International, StoneMor, Carriage Services, Park Lawn Corporation, Hillenbrand Industries, Assurant, Matthews International, and Security National Financial Corporation – have, as a group, rebounded about 16.8% from those prices on April 3.  However, when you look at a “Year-to-Date” number, you will see that they are still down about 23% from where they were on January 1, 2020.

The DCI, which is comprised of the total price of one share of each of those stocks above, on Friday, June 19, 2020 stood at $234.20 as compared to $200.49 on April 3, and $303.73 on January 1, 2020.  Again, that is down about 23% for the year to date.

If you compare that with our indexes that sit at the following year to date numbers, you would have to surmise that the investing public is wary of how the death care industry is faring during the COVID-19 pandemic.  Our comparison index numbers as compared to the DCI year to date number of a 23% decline are as such:

  • Dow Jones Industrials – Down 9% year to date
  • S & P 500 – Down 4% year to date
  • NASDAQ – Up 11% year to date

Individually, the year to date stock price numbers for the companies that comprise the DCI are as such:

  • Service Corporation International – Down 13%
  • StoneMor, Inc. – Down 38%
  • Carriage Services – Down 23%
  • Park Lawn Corporation – Down 26%
  • Hillenbrand Industries – Down 22%
  • Assurant – Down 18%
  • Matthews International – Down 52%
  • Security National Financial Corporation – Up 28%

To be sure, virtually all of the DCI composite companies are up in value since their lows in early April and most have seen a slow rise since May.  However, there does seem to be a wait and see attitude about how the service companies will come through the COVID-19 attendance restriction phase.

It is interesting to note that Security National Financial Corporation (SNFC) has been the only positive performer year to date of all eight of the DCI stocks.  It is also interesting to note that Assurant is the best performing negative performer year to date of the rest of the group.  SNFC does much more business, by revenue in the financial sector (preneed insurance, cash-flow assignments, and mortgages) than it does in the death care services sector with their funeral homes and cemeteries.  And, of course, Assurant is not in the death care services business, but belongs to this group of DCI stocks because of its preneed insurance business.

In our opinion, the other six companies of the DCI all deal, to some extent, with the death care services sector.  Four are funeral home/cemetery services companies and the other two, Hillenbrand and Matthews International, provide products to those companies.  That fact leads us to believe that it is the death care “services” sector, where we have talked about lower than normal revenues because of the pandemic, that the investor is most wary about.

The 2nd Quarter will be ending shortly and by late July we will be getting 2nd Quarter reports which will include a full quarter of pandemic timed financial results which should give all investors a better idea how the death care world is holding up in this very strange year.

Disclaimer – The opinions expressed are those of Funeral Director Daily.  The management of Funeral Director Daily holds stock positions in Service Corporation International, Park Lawn Corporation, Hillenbrand Industries, and Security National Financial Corporation.

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