This company, primarily an operator of cemeteries and funeral home (60% of total revenue), has been grouped into funeral and cemeteries sector in professional service industry.
It seems that demand for cemetery product and service of companies in this sector, according to the typical company data, has been steadily growing in the past several years as indicated by the continuingly increased average comparable revenue (both charge and number of services) of some of companies. And it seems that demand for funeral home products and service has been relatively weak since 2014.
However, while the demand has been steady the intensive competition and increasing operation costs have been challenges for some smaller companies that have more difficulties in controlling costs and improving operation efficiency due to limit of scales. Therefore, we have seen shrinking margins among small companies in the past several years.
The typical gross margin (including overhead and selling) seems to be decreasing (down from about 25% in 2014 to 21% in 2017). While companies seem to be successful in controlling G&A spending (G&A as percentage of sales down to about 9% from 10%), their operating margin has gone down to about 12% in 2017.
The typical average stock Price/cash flow ratio is: 22. (Interest/EBI ratio of 38%).
It seems that the demand for funeral home products/service of this company has been weak in the past three years as indicated by decreasing comparable operating revenue in its
funeral home service. Its cemetery operating revenue experienced fast growth during the same period due to primarily increase in comparable sales.
Acquisition seems to be contributing small increase in revenue for both funeral home and cemetery segments.
The fiscal 2017 compared with the 2016
Cemetery:
Revenue increased 5.6% attributable to increase of 5% in same store operating revenue.
Funeral home:
Revenue was flat attributable to increase of 1% in same store operating revenue.
The fiscal 2016 compared with 2015
Cemetery:
Revenue increased 6% attributable to increase of 6 % in same store operating revenue.
Funeral home:
Revenue decreased 1% attributable to decrease of 1.4% in same store operating revenue.
The fiscal 2015 compared with 2014
Cemetery:
The Revenue increased 2.2% attributable to increase of 5.5% in same store operating revenue.
Funeral home:
Revenue decreased 1.6%. the same store operating revenue was flat.
Its gross margin has gone up slightly to about 23% since 2014 attributable to fast increase in comparable revenue in cemetery and cost management. With the improved SG&A as percentage of sales (around 5% in 2017), its operating margin went up to about 18% in 2017.
Stock performance
This stock currently has a stock price/cash flow ratio of 26. We think that its stock is being relatively fairly valued compared with its peers.
