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Funeral Home Stocks: All You Shouldn’t Miss

Charlie Brooks

Apr 06, 2022 16:47

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According to projections, the market for death care services in the United States is estimated to reach $28.7 billion by 2020.


The growth in deaths has raised the demand for the products and services businesses provide in the industry.


Due to the pandemic's societal disabling effects, funeral sizes and scopes have been reduced, resulting in lesser revenue per service performed.

What is a Funeral Home Stock?

Funeral Stocks is a directory of publicly traded funeral homes that operate funeral homes, cemeteries, and crematories. Stocks in funeral homes are traded on traditional stock exchanges such as the NYSE, NASDAQ, and AMEX.


While many funeral homes seem to be tiny family enterprises, the majority are controlled by large companies. Service Corp International (NYSE: SCI) is the biggest, with 1,470 funeral service facilities and 483 cemeteries as of 2020, including 297 combination sites.


Carriage Services (NYSE: CSV), Hillenbrand (NYSE: HI), Matthews International Corp (NASDAQ: MATW), and StoneMor Partners are some large names in funeral home stocks (NYSE: STON).


These stocks are traded on most major exchanges and are bought and sold in the same way as regular stocks. While some companies concentrate on funeral homes and cemeteries, others specialize in caskets and cremation supplies.


Additionally, you may invest in many funeral home and death care stocks simultaneously by purchasing M1 Finance's Gray Wave Portfolio. The fund's cost ratio is minimal (0.26 percent as of March 2021), and it offers a high dividend yield (2.5 percent ). The fund invests in health care index funds, real estate investment trusts, and death care stocks, such as those mentioned above.


This diversified investment portfolio has the potential to profit from many sectors of the death care business while also serving as a significant income-generating asset and growth stock over time.

What Is The Size Of The Death Industry?

The death care business is very profitable – pun intended. By 2023, the US death care industry will generate around $68 billion in revenue.


The death care industry is comprised of a variety of businesses and organizations that provide death-related services, including the following:


  • Funerals

  • Coffins

  • Cremations

  • Burials

  • Memorials

  • Headstones


Funeral homes control more than half of the market share in the death care business. Funeral homes are expanding their services and adapting their facilities to maintain this development, including the following:


  • Reception rooms

  • Banquet spaces

  • Kitchen space and equipment

  • Ample parking

  • On-site therapists and grief counselors

  • Drive-through funeral options (particularly helpful during Covid-19 quarantine and social distancing periods)


Cremation is making ground in the funeral home industry's top rank as many Americans choose cremation. However, some individuals continue to acquire land in cemeteries to provide a location for their departed loved ones to visit.

How much money does a funeral home make on a per-funeral basis?

Funeral expenses are often divided into three categories:


Payments made to the funeral home Payments made to the cemetery to purchase a monument or burial marker.


Typically, families spend around $6,000 on funeral home products and services. These fees often include the coffin, the funeral director's charge, embalming and corpse preparation, the funeral ceremony and viewing, and other incidental items such as death certificates.


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Historically, most cemeteries were held by non-profit organizations, but for-profit funeral home operators now control many. On average, families spend roughly $2,000 at the cemetery for products and services.


Certain funeral homes will arrange for the family to acquire cemetery space and a headstone and earn a percentage on the transaction. Funeral homes may earn additional revenue by providing non-standard services such as floral services or hairstyling for the dead.

Are Any Funeral Homes Publicly Traded?

There are both privately owned and publicly traded funeral homes, and twenty-four publicly traded death care firms are listed on stock markets worldwide. In recent years, an increasing number of businesses have gone private.


Japan has the most publicly traded funeral homes, excluding those with limited exposure, such as Walmart's casket business.


However, unless you are proficient in Japanese, investing in Japan's death care stocks is not suggested. They are not obligated to have their financial statements translated into English.


If you're contemplating investing in a death care business, consider various aspects, including the following:


  • Regulatory environment

  • The margin of safety and financial ratios

  • Levels of debt

  • Prospects for acquisition

  • Competitive environment


In their target markets, the death rate is high. Additionally, you may want to carefully examine the list of services supplied since certain services are increasing in popularity while others are declining (more on this later).

Is Investing In Funeral Home Stocks A Good Idea?

Covid fatalities in the United States are predicted to surpass one million in the spring of 2022. However, it is all Covid's fault, and it ignores the opioid crisis, the aging population, the rise in cancer, and various other variables that contribute to death.


Profitable funeral homes still exist, and many will continue to be profitable, particularly if they concentrate on the following:


  • Increases in price Acquisitions

  • Increasing sales of pre-need items

  • Increasing their profit margins

  • Providing novel, cutting-edge goods, and services


Today, funeral establishments' profit margins are as low as 6 to 7%. Given that many individuals already consider typical funeral charges excessive, some funeral homeowners may find that increasing pricing is not a practical choice. One strategy for growing earnings without increasing prices is concentrating on pre-death sales of funeral services and/or plots.


Funeral home sales growth is quite normal. The world population has increased 400% in the previous century – this has provided a continuous flow of business and revenue to death care organizations and will continue to do so.


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Each year, over 2.6 million Americans die. A tendency that is predicted to reach 5 million by 2040 as the United States' population expands and ages.

Is it Profitable to Own a Funeral Home?

While operating a funeral home was formerly a near-certain method to earn money, this is not necessarily the case now. Maintaining a prosperous funeral home is still doable, but you must be prepared for industry changes.


There are five fundamental strategies for funeral homes to boost their revenues, including the following:


  • Increase in prices

  • Acquiring

  • Increasing sales of pre-need items

  • Increased profit margins

  • Introducing new services


Given that many individuals already believe funeral fees are excessive, increasing them is not necessarily a practical choice. Concentrating on the sale of funeral services or burial sites in advance might be beneficial.



Operating a funeral home in the suburbs rather than in a large city is an excellent strategy to increase operating margins since you will almost certainly pay less in taxes.


Providing a range of services may be the most effective approach for funeral homes to increase profitability at the moment. Green funerals (using biodegradable caskets or shrouds), memorial jewelry, and deluxe rental coffins are lucrative alternatives.


Investing in cremation equipment may be the most beneficial service you can provide. Many individuals choose cremation over burial because it is more economical, environmentally friendly (no embalming chemicals are needed), and fewer Americans are religious than in the past (meaning they care less about religious funeral rituals).


Please keep in mind that operating crematory equipment requires training. Cremation Association of North America and the National Funeral Directors Association now provide crematory certification courses to their members to encourage safe cremation methods.


As a result of the cremation equipment and training expenses, time and money would be wasted in the immediate term before revenues increased.

You Should Consider the Funeral Services Industry's Future Risk

COVID-19's Effects

Increased mortality as a result of the coronavirus pandemic has increased the demand for goods and services of funeral service. The steady growth of COVID-19 cases has resulted in an increase in demand for funeral homes, crematories, and morgues. However, limitations on the number of gatherings at funerals due to social alienation are reducing income per service done. Additionally, less social engagement during funerals is a danger to pre-need income. Additionally, social isolation has resulted in an upsurge in internet funerals - including live broadcasting of the services. This again puts the income of established funeral service providers at risk.

Consistent Demand

While the funeral services sector is by nature unpleasant, the inevitability of death ensures that demand for its services remains stable. As a result, industry participants stand to gain from increased mortality rates and an older baby boomer demographic. The whole funeral process, which includes embalming as well as the use of caskets, urns, cars, funeral employees, and equipment, among other things, represents a considerable income stream for industry players. Additionally, firms are concentrating their efforts on expanding and acquiring funeral homes, as well as developing cemetery land, in order to increase income.

Increased Cremation Rates Have a Negative Effect on Revenue Per Client

The growing preference for cremation over conventional funerals has harmed the funeral services industry's income per customer. Cremation is substantially less expensive than a typical funeral, with the average cost of a cremation service being around $2,500. Indeed, the epidemic has accelerated this tendency, with families opting for cremation over lavish conventional funerals.

The threat posed by Less Expensive Alternatives

The availability of funeral-related items on e-commerce platforms and the adoption of environmentally friendly burial practices pose significant threats to industry players. Consumers clearly prefer shrouds and forest burials over coffins and cemeteries, while technological advancements are boosting the popularity of video tributes.

Stocks of the Best Funeral Homes

Service Corporation International (NYSE: SCI)

Service Corporation International (NYSE: SCI) is the biggest funeral home firm not just in North America but also around the globe. And, oddly, it has a far greater influence in Canada than Park Lawn.


The corporation operates 158 independent funeral homes, four independent cemeteries, and eight joint ventures. It operates about 1,000 funeral homes, 183 cemeteries, and 290 combination sites in the United States, totaling 1,938 locations.


This puts them far ahead of the game's second-biggest player: Park Lawn. This is reflected in the company's revenue, which accounts for around 15% of the entire revenue earned by the death care business in the United States and Canada.


Additionally, Service Corporation's monopoly makes it one of the top funeral home stocks in North America. In the previous decade, it returned nearly 660 percent to investors (including dividends).


If it continues at this rate, your money may easily double or even quadruple in half a decade. And as the undisputed leader in a highly fragmented sector, it is about as steady and recession-resistant as a stock can be.

Park Lawn Stock

Park Lawn is Canada's biggest and only publicly listed funeral home corporatio. It has a considerable presence in the nation and a far greater presence in the United States.


The corporation has a total of 135 cemeteries and funeral homes (138). The Canadian portion of the portfolio (31 buildings) is a drop in the bucket compared to the US portion, which includes 242 funeral homes and crematories in 16 states.


By location and geographic reach, it is the third-largest funeral home corporation in North America. Nonetheless, this ranking places it significantly closer to the firm ahead of it than to the leader: Service Corp International.


It has been a profitable stock so far. With a ten-year compound annual growth rate of 22% (between February 2012 and February 2022), it ranks among the top growth stocks in the nation, and its growth stays eerily consistent.


Additionally, it is a dividend stock. However, the yield is negligible compared to the company's growth potential. However, the firm is in danger as a result of North America's significant trend toward cremation (in Canada more than in the US).


While this risk has not yet impacted the company's profits or stock performance, it is something to consider before making an investment choice.


If you're set on investing in a solely Canadian funeral home firm, Park is your only option; fortunately, it's also one of the top funeral home stocks in North America.

Matthews International Corp. (NASDAQ: MATW)

Matthews International Corp. (NASDAQ: MATW) is another firm that operates in the industrial equipment and services industry in addition to providing death care services.


It supplies caskets and tombstone decorations across North America, Europe, Australia, and New Zealand via its memorialization business. Likewise, its industrial division provides a varied selection of items, including cremation accessories and monuments.


Matthews International Corporation's stock price is among the highest among funeral organizations due to its growing operations on both ends. The average value increased to $43.2 in April 2021. Since then, the figures have fluctuated somewhat between $30 and $35. This predictable range enables early detection of aberrant occurrences and fast intervention to improve cash flow and avert catastrophic losses.

Transportation Services (NYSE: CSV)

Carriage Services is the next name in line, with 203 sites around the United States. Additionally, it has a significantly higher concentration of funeral homes and a broader reach in that asset class (171 in 26 states).


Given the size of cemeteries and their sole purpose for burial, even a lesser proportion (32 in 12 states) may be deemed a healthy enough share of the entire portfolio.


The geographic diversity of the portfolio is population-based, with most sites in Texas and California. The company's income has been gradually increasing, and it looks to be financially sound.

Hillenbrand

Hillenbrand is a multi-sector conglomerate with a major concentration on the funeral home business. It is organized into two primary subsidiaries: Batesville, the biggest seller of caskets and cremation goods in North America, and Kavoklave, a market leader in funeral service equipment.


Hillenbrand is well-positioned to satisfy the requirements of today's customers due to the breadth of its services and products. As a result, the brand has ranked among the best funeral home stocks in recent years.


Regular cash flow and resource growth are also reflected in the company's financial data. Despite the pandemic-induced worldwide financial crisis, average mortuary stocks have remained stable, hitting a high of $51.9 in January 2022. These strong results are expected to continue, providing unitholders with something to look forward to in the coming years.


Despite the fact that the stock's long-term capital appreciation potential is equivalent to that of Service Corp or Park Lawn, the stock's growth trend is inconsistent. Between February 2012 to February 2022, the stock increased by more than 700 percent.


However, a large portion of that rise may be attributable to the fast rebound after the epidemic. Therefore, even if it is one of the top funeral home stocks, you should approach it more cautiously than the other two.


Because it is neither the market leader nor has its capital appreciation potential been constant, it has the ability to pay off handsomely but also to become a dead weight.

Stonemor Stock 

Even though its market capitalization is dwarfed by Carriage Services, Stonemor has the second-largest portfolio of funeral home stocks on this list, and unlike the majority of the other firms on this list, its portfolio is highly weighted toward cemeteries rather than funeral homes.


It operates 301 cemeteries and 70 funeral homes in the United States (24 states), with about 11 in Puerto Rico.


This portfolio distribution might have been advantageous if burials were more common than cremations, but with the ratio currently substantially skewed in favor of cremations and the tendency continuing to expand, Stonemor's cemetery-heavy portfolio may be pulling the firm down.


This is reflected in the company's stock price as well. In 2016, the firm slashed its payouts, and the stock plunged over 60% in a couple of weeks.


Since then, the stock has mostly declined (if you disregard the post-pandemic growth spurt).


This stock is included on this list since it is one of the few publicly listed funeral home firms in North America, although it is unlikely to be considered one of the country's finest funeral home stocks, at least for the time being. However, the winds may change.


This ends the list of funeral home stocks. There are a few other companies that are frequently included on similar lists, including the US flower giant that also handles funerals (though their primary source of revenue is weddings), companies that manufacture caskets (among other things), and even companies that manufacture tombstone granite.


However, since they fall under the larger category of "death care" companies and are not specifically funeral home stocks, I have left them off this list.

Final Remarks

Purchasing a funeral parlor now would be a risky endeavor, given the casket industry is also undergoing a slump. If you're seeking a more secure and varied long-term investment in death care, cremation stocks or death care funds are better options. Bear in mind that the market is always developing as new trends and customer preferences arise and gain popularity.