Funeral home stocks are not a sector that you often hear investors talking about.
That might just be because death is a morbid and depressing subject.
As the saying goes, there are only two certain things in life, death and taxes.
With this information in mind, it may be necessary to develop a deeper understanding of the funeral home business.
Approximately 8,000 people die every day in the United States, and more than 300,000 people die every day worldwide.
Even a recession won’t stop the inevitability of death, classifying the funeral home business as recession proof.
But that doesn’t necessarily make funeral home stocks a good long term investment.
Funeral Home Stocks: Industry Consolidation
While the funeral home industry is highly fragmented, the next decade could result in huge industry consolidation.
Ultimately, this will be bad news for small to medium sized funeral businesses. But good news for publicly traded funeral home companies.
Companies like Service Corporation International will serve to benefit, due to their strong cash flow from operations, industry expertise and diversification.
The global death care industry in the U.S. was last valued at $28.7 billion in 2020. It is projected to grow at a compound annual growth rate (CAGR) of 4.6% from 2023 – 2027.
As funeral costs continue to soar, family’s are looking to cheaper alternatives like cremation which took off during the 2020 Covid-19 pandemic.
While this pivot is still in its infancy stage, large publicly traded funeral home stocks are likely to benefit from this industry consolidation.
However, this is only if they are able to keep up with industry trends.
With the global population continuing to rise, deaths will rise alongside with it. This might provide a good case for funeral home stocks.
Best Funeral Home Stocks
- Service Corporation International
- Park Lawn Corporation
- Hillenbrand
- Carriage Services
- Matthews International
1. Service Corporation International (NYSE: SCI)
- Ticker: SCI
- Dividend Yield: 1.53%
- Market Cap: $10.80 Billion
Service Corporation International is an American funeral service company headquartered in Houston, Texas, United States.
They are one of the largest funeral service providers in North America.
Service Corporation International owns and operates more than 1,500 funeral homes and 400 cemeteries.
The company operates in 44 different U.S. states, 8 Canadian provinces, The District of Columbia and Puerto Rico. This equates to more than 1,900 service locations.
SCI returned 91.14% to its shareholders over the past 5 years. That’s certainly impressive, when compared to the S&P 500’s 54.64%.
Service Corporation International employs more than 20,000 people and has approximately $15.06 billion in total assets.
In 2022, the company had annual revenues of $4.10 Billion.
2. Park Lawn Corporation (TSE: PLC.TO)
- Ticker: PLC.TO
- Dividend Yield: 1.53%
- Market Cap: $933.66 Million
Park Lawn Corporation is a Canadian funeral service company headquartered in Toronto, Ontario, Canada.
They are one of the largest funeral service provider in Canada.
Park Lawn Corporation 175 funeral homes, 145 cemeteries, and 35 on-site service locations across the U.S. and Canada.
Analysts expect PLC to grow its revenue’s over 10% in 2023. While the company projects EPS growth of 10.6% from 2023 – 2026.
Furthermore, the company completed a number of acquisitions in 2022 including Chancellor Funeral Home, Hudson Funeral Home & Cremation Services, and Farris Funeral Service.
Park Lawn Corporation employs more than 2,000 people and has approximately $1.47 billion in total assets.
In 2022, the company had annual revenues of $326.10 Million.
3. Hillenbrand (NYSE: HI)
- Ticker: HI
- Dividend Yield: 1.90%
- Market Cap: $3.21 Billion
Hillenbrand is an American industrial services company headquartered in Batesville, Indiana, United States.
They are primarily an industrial engineering company providing advanced molding solutions for the automotive, consumer goods, industrial, and packaging industry.
Hillenbrand services the funeral home business through their advanced manufacturing process of caskets, urns and containers.
While the company doesn’t directly own any funeral homes or cemeteries, they provide critical material for the industry.
Hillenbrand employs more than 10,000 people and has approximately $3.86 billion in total assets.
In 2022, the company had annual revenues of $2.94 Billion.
4. Carriage Services (NYSE: CSV)
- Ticker: CSV
- Dividend Yield: 1.58%
- Market Cap: $433.13 Million
Carriage Services is an American funeral service company headquartered in Houston, Texas, United States.
The company’s portfolio spans more than 200 locations, with approximately 170 cemeteries across 26 states.
Carriage Services has been rapidly expanding its M&A strategy over the last decade. However, they recently divested from 4 of their cemetery assets in Q4 2022.
The highest population of their funeral home assets are primarily located in California and Texas.
Furthermore, Carriage Services has delivered an 11.5% EPS compound annual growth from 2013 – 2022.
Carriage Services employs more than 2,500 people and has approximately $1.19 billion in total assets.
In 2022, the company had annual revenues of $370 Million.
5. Matthews International (NASDAQ: MATW)
- Ticker: MATW
- Dividend Yield: 2.39%
- Market Cap: $1.16 Billion
Matthews International is an American industrial services company headquartered in Pittsburgh, Pennsylvania, United States.
The company operates 3 businesses; Industrial Technologies, Memorialization, and SGK Brand Solutions.
Their subsidiary memorialization has been operating in the funeral service market for over 100 years. They primarily provide industrials funeral products including caskets, memorials, cremation, and architectural products.
Matthews International employs more than 11,500 people and has approximately $1.88 billion in total assets.
In 2022, the company had annual revenues of $1.77 Billion.
Funeral Home Stocks: Should You Buy Now?
Funeral home stocks have a lot of potential over the long term, but they are certainly not for everyone.
Companies like Service Corporation International have delivered impressive shareholder returns over the last decade.
While industry EPS growth still remains strong, the industry is currently seeing a large shift into cremation services.
This means that current industry players might have to pivot their business models.
As the global population and cost of living continues to rise, families will be seeking more affordable alternatives for funeral services.
As a result, investors might be better off focusing on industries with better economic moats and less industry volatility.
Disclosure: The author holds no position mentioned in this article. Freedom Stocks has a disclosure policy.
