Published Mon, 28 May 2012 10:00 CET by TopYields.nl
The old maxim by Benjamin Franklin says that “nothing is certain but death and taxes”. As death is certain, so, it seems, is the funeral business. However, today, the $21 billion business of death in the United States faces major challenges, as improved healthcare extends the lives of a progressively aging American population. Aside from the near-term weakness due to lower mortality rates, the funeral industry has become a fragmented and highly competitive business. Still, the industry has favorable long-term growth prospects, as the aging baby-boomers enter the old age life cycle.
The death industry in the United States has flourished despite the declining mortality rates and thus the slow growth in the number of deceased persons even with a fast population growth (see graph below). The key reason behind the strong financial performance until recently has been a robust growth in the cost of funeral products and services. On average, since 1990, the cost of funeral products and services has been rising at a rate double that of the overall core inflation (see graph below). According to the National Funeral Directors Association, the cost of an adult funeral has increased from $704 in 1960 to about $7,323 today. Yet, recently, the traditional industry players, such as Hillenbrand (NYSE: HI), Carriage Services (NYSE: CSV), and Stewart Enterprises (Nasdaq: STEI), have seen their pricing power vanish and their margins squeezed by two new developments: the entry of discount retailers in the casket business and the increasing preference for cremation.
Stock symbol(s): COST,CSV,HI,SCI,STEI,STON,WMT
|Stock name||ISIN||Last trade||P/E||EPS||Div PS||Ex Div Date||Payout Ratio||Div Yield|
|STONEMOR PARTNERS L.P.||US86183Q1004||26.06||0.0||-0.4||2.38||May 02 2013||-654||9.13|
|HILLENBRAND||US4315711089||23.63||20.2||1.2||0.78||Jun 12 2013||67||3.30|
|WAL-MART STORES||US9311421039||74.46||14.9||5.1||1.88||May 08 2013||37||2.52|
|SERVICE CORP INTERNATIONAL||US8175651046||17.76||24.0||0.7||0.28||Jun 12 2013||37||1.58|
|STEWART ENTERPRISES||US8603701058||13.07||24.2||0.5||0.18||Apr 11 2013||33||1.38|
|COSTCO WHOLESALE||US22160K1051||110.19||24.7||4.5||1.24||May 15 2013||27||1.13|
|CARRIAGE SERVICES||US1439051079||18.71||30.1||0.6||0.10||May 14 2013||16||0.53|
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