This funeral firm's Q3 net profit galloped in double-digits. Buy alert?

Highlights

  • There are some smaller industries in Canada that have some significant performers soaring under the radar.
  • Funeral and memorial services, for instance, is one such market.
  • A funeral service provider’s net earnings surged by a whopping 102.9 per cent year-over-year (YoY) in the first nine months of 2021.

Investors generally look into prominent sectors such as oil and gas, technology and financial services when planning an investment in the stock markets. However, there are some smaller industries that have some significant performers soaring under the radar.

Funeral and memorial services, for instance, is one such market.

While it may be a grim space of business, it is, nonetheless, a necessary one that soldiers on even in the midst of a crisis.

A recent study by industry researcher IBISWorld noted that with disposable income expected to grow over the next five years, the funeral homes industry in Canada is also likely to see a surge as more people spend on costly services.

In North America, there is one major player in the funeral industry that holds significant market share in an otherwise competitive market.

Recently, this funeral services provider posted a double-digit revenue growth for its third quarter of fiscal 2021 and announced its operational expansion in North America.

We are talking about Park Lawn Corporation (TSX: PLC), which has been in business for nearly 130 years since 1892.

Park Lawn’s net profit surged 102.9% YoY in the first 9 months of 2021

The company is known to provide funeral-related goods and services in Canada and the US along with running cemeteries, crematoriums, and funeral homes.

On a quarterly basis, Park Lawn Corporation’s net profit surged by 67.6 per cent YoY to C$ 9.05 million in the third quarter of 2021, up from C$ 5.4 million in the same period a year ago.

However, its net earnings surged by a whopping 102.9 per cent year-over-year (YoY) in the first nine months of 2021.

Its net revenue, on the other hand, saw a growth of 14.7 per cent YoY to a whopping C$ 92 million in the latest quarter.

Park Lawn also saw a YoY surge of 3.2 per cent in its net revenue from comparable operations in Q3 FY2021, which was 8.1 per cent YoY excluding the foreign exchange impact.

Its adjusted net earnings increased by 56 per cent YoY to C$ 12.08 million in this quarter, while its adjusted EBITDA surged by 23.1 per cent YoY to C$ 23.52 million.

Like some of the top players of the Toronto Stock Exchange (TSX), Park Lawn also distributes regular dividends among its shareholders.

The Houston, Texas-headquartered company is scheduled to dole out a monthly dividend of C$ 0.038 per share on December 15 this year against an ex-dividend date of November 29.

Park Lawn Corporation (TSX:PLC)’s financial performance in Q3 FY2021

Image source: © 2021 Kalkine Media Inc 

Data source: Park Lawn Corporation

Park Lawn Corporation’s (TSX: PLC) noteworthy P/E ratio

Park Lawn Corporation presently holds a robust price-to-earnings (P/E) ratio of 38.6. It also notes a return on equity (ROE) of 5.45 per cent and a return on assets (ROA) of 2.06 per cent.

The funeral services provider’s stock, which closed at a price of C$ 41.5 apiece on Thursday, November 25, clocked a 52-week high of C$ 42.02 earlier this week, on Monday, November 22.

As for its stock performance, PLC stock has jumped by roughly 15 per cent in the last one month, while rocketing by nearly 26 per cent in the span of six months.

The cemetery business’ stock also delivered a return of almost 49 per cent in the last 12 months.

Park Lawn Corporation’s earnings per share (EPS) stands at 1.07 at the moment, while its price-to-book (P/B) ratio hovers over 2.074.

Park Lawn Corporation (TSX:PLC)’s stock performance as of November 25, 2021

Image source: © 2021 Kalkine Media Inc 

Bottom line

Park Lawn Corporation appears to be focused on expanding its business and operation footprint across North America, which is one of features that investors generally look into a company before investing.

It recently acquired Pugh Funeral Homes and New Hope Memorial Gardens, which added a cemetery and five funeral homes to its operations, strengthening its presence in North Carolina.

Further, the company also added one funeral home in Pembroke, Ontario by acquiring Malcolm, Deavitt & Binhammer Funeral Home Limited.

On November 15, Park Lawn Corporation completed the acquisition of Smith businesses to expand its operational footprint in Maryville, eastern Tennessee. The acquisition deal included all of Smith’s assets, including one funeral home, one funeral home-cum-cemetery property and five centers.

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