About Carriage Services

The funeral space is one of those industries that is hardly ever discussed but, as grim as it may sound, is a very lucrative business. 

From funeral homes and burial services to cremation and cemetery operations, there is a lot of money to be made in funeral-related services, and Carriage Services is one of the larger players and primary beneficiaries of the industry and its offerings.

Oddly enough, in a strict business sense, we liken funeral and death services to weddings, which is commonly considered to be a celebration of life. Mainly, both of these events and their associated ceremonies are very emotional, which helps companies like Carriage during times of economic downturn, as weddings and funerals are commonly thought of as “spare no expense” kind of milestones.

Additionally, as the world as a whole continues to struggle with widespread threats of COVID-19 and its associated variants and other health complications such as obesity among many others, objectively speaking, these are all favorable trends for Carriage and its ceremonial counterparts, although not for humanity as a whole. We feel the need to reiterate that we don’t mean to come off as any form of insensitive, ignorant or plain cold, rather, as investors looking to grow our capital and wealth overall, we are simply shedding light on potential, lesser-known investment avenues and opportunities that can possibly help you achieve your own investment goals, whatever they may be.

As is the case with all of our other stock analysis articles, it’s only fitting that we take a look at Carriage’s numbers and try to decipher whether or not an investment in this company is a prudent one for now and for later.

Carriage Services’ stock financials

The company’s stock is currently trading at a share price of $24, accompanied by a market capitalization of $360 million (indicating that it is a smaller company than what we’ve analyzed in past articles), a price-to-earnings (P/E) ratio of 8.72 and issues its shareholders an annual dividend of $0.45. 

The most relevant nuggets of information we derived from these initial financial metrics is that the company is relatively small and also apparently undervalued, given its current P/E ratio, which is far less than 20, which is considered to indicate that a stock is trading below fair value relative to what it’s actually worth.

Let’s move onto the company’s balance sheet.

Specifically, the company’s executive team is in charge of approximately $1.2 billion in total assets along with around $1 billion in total liabilities.

Honestly, we don’t know much about the funeral industry and furthermore whether or not this is a larger, excessive amount of debt or actually just a manageable amount, however upon a quick review of other prominent players in the space, it is far from uncommon to have the amount of total liabilities to be close to that of its total assets, and we’re also simply grateful that the company’s total assets outweigh its total liabilities in general.

Carriage’s balance sheet is quite basic and that is assuredly not a bad thing, so long as the company’s management team can continue to tame its liabilities and remain asset-heavy.

Onto the company’s income statement, Carriage’s total revenue over the last five years has been as consistent as we originally expected, however more notably it has been rising as well, which definitely caught our attention.

It seems like Carriage is either eating its competitor’s lunch or continuing to tap its core market, which is possibly different from that of its competition. 

For instance, the company might focus heavily on certain geographies while the competition focuses on others.

Specifically, the company’s total revenue in 2017 stood at $258.1 million and climbed each year until peaking in its last reported year, 2021, at nearly $376 million.

This is some solid revenue growth from such an unknown company, at least in the eyes of the pundits or so-called “experts.”

As it relates to the company’s cash flow statement, Carriage’s net income has fluctuated a bit over the past five years but has thankfully remained well above the black, as has its total cash from operations during the same five-year time period.

This company’s financials are predictable, which is something investors tend to seek (or at least should) when it’s too late, instead of before things get topsy-turvy.

Carriage Services’ stock fundamentals

We assumed that being one of the leaders in the funeral services space, for better or for worse, comes with a strong ability to turn a profit and one higher than the competition at that. 

We assumed correctly, as Carriage’s trailing twelve month (TTM) net profit margin is currently perched at 12.5% to the industry’s average of 2.49%, according to TD Ameritrade’s platform.

This is no small difference and tells us that Carriage has a sizable moat in this industry, which is another desirable quality prudent investors seek, particularly during times of economic carnage.

Additionally, the company’s TTM returns on equity, assets and investment are all notably higher than that of the industry’s average as well, again, indicating that it has a moat and is also efficient with its capital.

We have no objections.

Should you buy Carriage Services stock?

A dour industry but a strong company, we were most surprised to see that the company’s revenues have been rising year after year and think that, although seldom analyzed or discussed by the pundits or others, the funeral industry is one that is quite recession resistant.

Given all of this information and its strong supplemental financial metrics, we give Carriage Services’ stock a “buy” rating.

DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.