Service Corporation International (NYSE:SCI) and InvoCare Limited (ASX:IVC on the Australian Exchange) are in the funeral and cemetery businesses and both have staged remarkable run-ups of late.
Not a Sexy Investment; But a Very Practical One.
Late last week Service Corporation International, owner and operator of 1,425 funeral homes and 373 cemeteries (of which 215 are combination locations) in 43 states, eight Canadian provinces, and the District of Columbia released its Q2 2012 results and shareholders were really rewarded.
Shares of SCI were at $10.89 on May 18 and are trading today in the $12.90 range; a gain of 18.45% in ten weeks.
For the quarter, SCI diluted earnings per share increased 20% to $0.18 in the second quarter 2012 vs. $0.15 YOY. The improved operating performance was primarily driven by higher preneed cemetery sales production and effective management of the Company’s cost structure.
Funeral gross profit increased by $6.3 million, or 8.4%, and the gross margin percentage increased to 20.6% for second quarter 2012.
Cemetery gross profit increased $6.9 million, or 17.4%, and cemetery gross margin percentage increased to 23.1% from 20.7%.
Net cash provided by operating activities excluding special items increased to $69.6 million. SCI sells the Dignity Memorial brand which offers assurance of quality, value, caring service, and exceptional customer satisfaction.
Tom Ryan, the Company's President and CEO commented on Q2 2012 and gave a little guidance…
"We are very pleased with the strong second quarter results. Impressive cemetery preneed sales performance, effective operating cost containment, and strategic deployment of capital combined to deliver a solid performance for our shareholders.
“On this success, we are raising our full year outlook for diluted earnings per share from continuing operations excluding special items to a range of $.70 to $.75. We are also revising upward our guidance for operating cash flow excluding special items to a range of $390 to $425 million for 2012.
“Once again, it is a testament to the hard work and dedication of our entire team who are focused on developing a more productive operating platform while continuing to enhance our customer experience."
I also like InvoCare Limited in this space. InvoCare is engaged in providing services in the funeral industry in Australia, New Zealand and Singapore. Company shares trade on the Australian Exchange. InvoCare was trading at $7.74 on June 25 and is currently trading in the $8.92 range; a gain of 15.24% in less than six weeks. InvoCare is twelve cents away from its 52-week high of $9.04.
I haven’t, don’t, and do not intend on holding any of the companies mentioned in this article.