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The Death Rate Soared Last Year - But Not Why You Might Think

3 Funeral Services Stocks Hitting All-Time Highs

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This story originally appeared on Zacks

A record rise in the death rate of nearly 17% occurred in 2020 according to final data from the U.S. Centers of Disease Control and Prevention’s National Center for Health Statistics.

- Zacks

The death rate spike – approximately 835 deaths per 100,000 people – was the sharpest increase in more than a century since the CDC began tracking the relevant data.

Heart disease and cancer persisted as the leading causes of death in 2020. Nine out of the top ten leading causes of death in the U.S remained the same.

Obviously, Covid-19 was a big part of the increase. The virus claimed hundreds of thousands of lives last year as it was responsible for more than 10% of all deaths. It was the third leading cause of death overall.

Yet what’s just as concerning is the rise in deaths from other causes. The impact that the pandemic has had on all aspects of individual health is noteworthy and deserves more attention.

In addition to people dying from the virus, diminished access to medical care and medication as well as mental health services contributed to the rise in non-Covid deaths. CDC preliminary data showed that drug overdose deaths topped 100,000 for the first time ever during the one-year period ending April 2021.

Let’s be clear about something – no one wants to profit from the suffering of their neighbor, particularly at a time in history during which a pandemic has ravaged through society. Investors can choose to invest in what they are comfortable with, or choose not to invest in something because they are not comfortable with the idea. And there’s nothing wrong with either approach.

Investing in funeral companies is nothing new as these companies have been around for a long time. The three firms we will discuss below are outperforming the market. Funeral companies are businesses and provide a service to those in need, just like companies in different industries provide a product or service to customers who require assistance.

By no means are we downplaying the souls lost since the start of the pandemic (may they rest in peace). We’re not here to debate the ethical side of this – we’re simply pointing out facts and guiding investors to top stock opportunities. And while investing in funeral companies may be controversial and lack excitement, there’s a reason they are outperforming the market.

The Zacks Funeral Services industry group is ranked in the top 15% out of all 253 industry groups. This group contains all three companies we will analyze below and has climbed nearly 38% on the year, outpacing the major indices.

Zacks Investment ResearchImage Source: Zacks Investment Research

Quantitative studies have shown that roughly half of a stock’s price movement can be attributed to its industry group. By investing in stocks ranked within the top Zacks Ranked Industries, you can dramatically improve your portfolio performance.

The Funeral Services group is also relatively undervalued with an average P/E of 14.44. And with above-average historical sales growth, dividend increases, and earnings growth, its not difficult to understand why these companies likely still have room to run.

Carriage Services, Inc. (CSV)

Carriage Services is a leading provider of death care services and products. Based in Houston, TX, Carriage Services provides funerals, burials and cremations, cemetery interment services, as well as the use of funeral homes and motor vehicles. CSV also sells products and merchandise including caskets, vaults, garments, and memorials.

CSV boasts a Zacks #2 Buy ranking and has exceeded earnings estimates in each of the last seven quarters. The company has posted an average earnings surprise of +27.96% over the past four quarters, supporting the stock’s 102.1% return this year. CSV most recently reported EPS of $0.82 back in October, a +38.98% surprise over consensus.

Carriage Services, Inc. Price, Consensus and EPS Surprise

Carriage Services, Inc. Price, Consensus and EPS Surprise

Analysts are in agreement in terms of recent earnings revisions, as 2021 EPS estimates for CSV have increased over the past 60 days by 14.66% to $3.05. This represents growth of nearly 64% relative to 2020. Looking out at next year, the Zacks Consensus Estimate for 2022 EPS sits at $3.52, growth of over 15%. CSV is due to report earnings on February 16th.

Hillenbrand Inc. (HI)

Hillenbrand is a global diversified industrial company that serves a wide variety of industries. Hillenbrand’s Batesville business segment is a recognized leader in the North American death care industry. This segment designs, manufactures and distributes funeral services and solutions such as burial caskets, cremation products, containers and urns, as well as memorialization products. HI was founded in 1906 and is headquartered in Batesville, Indiana.

Trading at relatively undervalued 13.16 P/E, HI has surpassed earnings estimates for the past two years running and has produced an average positive surprise of 14.94% over the past four quarters. The company most recently reported EPS for the quarter ending in September of $1.00, a +9.89% surprise over estimates. HI stock is currently up over 30% this year.

Hillenbrand Inc Price, Consensus and EPS Surprise

Hillenbrand Inc Price, Consensus and EPS Surprise

Analysts covering the firm have upped their 2021 EPS estimates by 3.81% in the past 60 days to $3.81. Next year looks quite favorable as the current Zacks Consensus Estimate for fiscal 2022 EPS stands at $4.09, translating to growth of 7.22%. HI is scheduled to report on February 2nd.

Service Corporation International (SCI)

Service Corp. International is North America’s leading provider of deathcare products and services. Based in Houston, TX, SCI operates through their Funeral and Cemetery segments. Similar to its counterparts, SCI provides professional services related to funerals and cremations, including the use of facilities and motor vehicles, cremation, memorialization, as well as catering services. The company markets its Dignity Memorial® brand which offers assurance of quality, value and exceptional customer service.

Also trading relatively undervalued at a 15.71 P/E, SCI has been on a tear recently in terms of earnings beats, averaging a +45.6% surprise over the past four quarters. The company has exceeded estimates for the last six quarters and most recently posted EPS of $1.16, an +84.13% surprise over estimates. SCI stock has followed suit, advancing nearly 42% this year.

Service Corporation International Price, Consensus and EPS Surprise

Service Corporation International Price, Consensus and EPS Surprise

Analysts covering the firm have amplified their full-year EPS estimates by +23.5% over the past 60 days.  The Zacks Consensus Estimate for 2021 EPS now stands at $4.31, representing a phenomenal growth rate of 48.11% over last year. SCI is slated for its next quarterly earnings announcement on February 21st.



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Carriage Services, Inc. (CSV): Free Stock Analysis Report

 

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