Invocare (IVC) - slow and steady funeral business

[RRR]

Invocare has funeral homes, crematoria and cemeteries in Australia and Singapore and has been growing steadily, predominantly through acquisitions. Recently, it has acquired the market leader in NZ-Bledisloe.

Some figures (approx)-
Shares-100m ($7.41)
ROE-40%
Operating margin - 20%
Net profit margin - 15%
Div yield - 3-4% (80% payout ratio)
PE - 20

I would be keen to hear from other posters about this company. It looks good to me, although slightly expensive.

[shasta]

Invocare has funeral homes, crematoria and cemeteries in Australia and Singapore and has been growing steadily, predominantly through acquisitions. Recently, it has acquired the market leader in NZ-Bledisloe.

Some figures (approx)-
Shares-100m ($7.41)
ROE-40%
Operating margin - 20%
Net profit margin - 15%
Div yield - 3-4% (80% payout ratio)
PE - 20

I would be keen to hear from other posters about this company. It looks good to me, although slightly expensive.

Been following IVC since it was around $5, they did a special discount to the victims of the Victorian bush fires a couple of years ago

A well run, steady performer & not a business that will go out of fashion anytime soon!

Looks fair value at present

[percy]

Good article by John Durie www.theaustralian.com.au/business headed Invocare clears final hurdle.

[RRR]

Thanks percy for the link. Quiet performer so far and they are in a very boring business and their returns won't raise the blood pressure. Their fortunes are also linked to ASX equity market since 50% of the prepaid funeral funds are invested in equities!

Disc-Hold

[RRR]

Slow, steady and expensive.

[percy]

Have not followed for awhile.Notice on Yahoo chart they are up and down like Whore's draws,which surprised me.

[RRR]

Just for you Percy!

[percy]

Just for you Percy!

That's more like it.Thanks.
You may or may not be interested but it was Invacare's chart I looked up.Same code different company.
Sorry.!!!!

[Skol]

If you have Sky check out CNBC's programme , 'Death, it's a living'.

"Who's cashing in when you check out". lol

First one on last night.

[Skol]

IVC's taken a hit, can't see any particular reason why, probably a little expensive, gonna take a look at it.

[RRR]

IVC will remain expensive long term - we are just seeing a correction I think as with the rest of the market. I am also looking to add to my holding.

[Skol]

IVC will remain expensive long term - we are just seeing a correction I think as with the rest of the market. I am also looking to add to my holding.

I just bought some, see how it goes, it's one business that well managed can't go wrong, baby boomers in large numbers kicking the bucket over the next 20 or so years.

[macduffy]

Plenty of high P/E Aussie stocks have taken a hit in recent days and IVC is one of them. Still on a P/E of 26 times so, although I like the company, I'll wait to see where the SP settles.

[macduffy]

FN Arena summarises brokers' views on IVC.

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=E66E4F44-EC69-856F-5040875065088C63

[ENP]

I just bought some, see how it goes, it's one business that well managed can't go wrong, baby boomers in large numbers kicking the bucket over the next 20 or so years.

Can't go wrong?

The business might not "go wrong" but overpaying can mean it will. Which in my opinion you have done. Just because it has gone down 5-10% etc this week doesn't automatically make it a good buy.

What return do you expect to make out of your investment per year?

[Skol]

Can't go wrong?

The business might not "go wrong" but overpaying can mean it will. Which in my opinion you have done. Just because it has gone down 5-10% etc this week doesn't automatically make it a good buy.

What return do you expect to make out of your investment per year?

The DY is around 3.5%, not too bad, but this a growing business, I just bought a few hundred, I'll add more if the price drops, but I expect shares overall to do very well over the next couple of years, according to the WSJ, the most underowned asset on Earth. i bought them 14% off the high.

It's possible I've paid too much, who knows what's around the corner, one thing's for sure, the GFC's over, the World is on the mend and the great Aussie staple, natural resources, is on the backburner.

[ENP]

The DY is around 3.5%, not too bad, but this a growing business, I just bought a few hundred, I'll add more if the price drops, but I expect shares overall to do very well over the next couple of years, according to the WSJ, the most underowned asset on Earth.

It's possible I've paid too much, who knows what's around the corner, one thing's for sure, the GFC's over, the World is on the mend and the great Aussie staple, natural resources, is on the backburner.

I don't understand your statement "most underowned asset" the only reason someone can buy a share in a publicly listed company is because someone who previously owned it has sold it to you.

And what good is a 3.5% dividend yield if you have overpaid for the stock and you lose part of your capital?

[Skol]

I don't understand your statement "most underowned asset" the only reason someone can buy a share in a publicly listed company is because someone who previously owned it has sold it to you.

And what good is a 3.5% dividend yield if you have overpaid for the stock and you lose part of your capital?

I don't know if you've noticed ENP, but there's no 100% guarantees that when you buy a stock the price will go up, sometimes it goes down, have you noticed that, or maybe you've got some secret formulae to ensure that every purchase is at the bottom of the curve.

As for the most underowned asset the WSJ report that amongst US citizens only a very small minority actually own stocks and mutual funds, and given that the GFC is now part of history, if they want to improve their chances of making some cash for the long haul, they better start buying.

[ENP]

I don't know if you've noticed ENP, but there's no 100% guarantees that when you buy a stock the price will go up, sometimes it goes down, have you noticed that, or maybe you've got some secret formulae to ensure that every purchase is at the bottom of the curve.

As for the most underowned asset the WSJ report that amongst US citizens only a very small minority actually own stocks and mutual funds, and given that the GFC is now part of history, if they want to improve their chances of making some cash for the long haul, they better start buying.

I don't have a formula to buy at the bottom of the curve, but I try to buy at such a low price to minimise the possibility.

What other companies did you weigh up and consider to buy when you bought the IVC shares? i.e. what other companies were on your watchlist and why did you decide on IVC as opposed to the others?

[skid]

Down another 1.6%--It has free fallen through the 30MA and has now settled on the 180 day MA.
might be good for those interested in this share to let the dust settle and maybe get in on some bargain buying.

[RRR]

I think the attraction is (other than good management) is that IVC is in death industry! People are living longer and apparently that means lower death rates and lower growth in death rates - does not sound promising does it! Peter Lynch likes this industry and I am not sure whether that is the reason why this stock is so expensive!

But the industry is so unglamorous! Does your kid or youngsters in the family aspire to work in the death industry and make a decent living/career? Is it a cool thing to do? So there is no or very minimal competition and very difficult to start a new business! Which youngster or entrepreneur in the right mind would start a business in the death industry where everyone is pumping money to prolong it? If you work in death industry will you get attention from your friends? I could go on... There is more to business than p/e ratios, book value etc.. There is a lot of intangible value in this business..

[Halebop]

Mortatility rates have been improving for a long time (NZ Stats)...

4568

But overall, the number of customers for companies like Invocare have been increasing, although the rate of growth slowed from around 1970 (NZ Stats)...

4569

And Baby Boomers are joining the mortality stats in growing numbers (NZ Stats)...

4570

[Skol]

Analysts report a soft death rate at the moment but a chart from Invocare's website indicates from about 2011 onwards the death rate should spike higher. Actual annual deaths about 140,000 in 2010, projected to reach 163,000 in 2019.

NPAT, EPS, DPS all expected to be up 30-40% from 2012-2014. Might be a little expensive, but I'll certainly top up on any weakness, it's a $1.4b company.

Yeah RRR, hardly a glamorous industry, but an essential one that won't be going away any time soon, been watching them for a few years, since about $5 a share and it doesn't decline very often.

And since I'm a baby boomer myself I'm slowly moving into a more conservative POV, I'll retire end of next year.

[RRR]

Last post 3 years ago! I am still holding. Share price has not moved much in the last 3-4 years. Expanding to USA - California.

[winner69]

Last post 3 years ago! I am still holding. Share price has not moved much in the last 3-4 years. Expanding to USA - California.


Business slowing down ...gone soft ....we need people to die

https://www.smh.com.au/business/small-business/we-need-people-to-die-funeral-businesses-worry-about-slowdown-in-deaths-20180817-p4zy10.html

[percy]

Business slowing down ...gone soft ....we need people to die

https://www.smh.com.au/business/small-business/we-need-people-to-die-funeral-businesses-worry-about-slowdown-in-deaths-20180817-p4zy10.html

Looks as though we will not be able to totally avoid death,"In the longer term,the trend for death remains positive."
Yeah right.?

[Joshuatree]

What a b'stard , people living longer and only a light flu season.Wrong cycle for death stocks.

[RRR]

Wow, my last post 3 years ago... I am still invested and added over the years, now the largest holding, 6 figure sum
Not a stellar return but decent.
Future is promising as always - they are renovating funeral homes to re-set for the future
Share price $15.33

[Joshuatree]

Looks to have been a bit of a rollercoaster for you RRR. Last time i looked there was alot of cut price budget competition piling in and stuffing things up for IVC. Looks to have adapted or altered its strategy going by the price recovery happening though?

[Fuzzy Dunlop]

Most of their cemeteries are in NSW right? Presumably the legislative changes permitting 25 to 99 year renewable interment rights in NSW are a good thing for IVC... provided customers aren't put off by the prospect of being dug-up!

[RRR]

Looks to have been a bit of a rollercoaster for you RRR. Last time i looked there was alot of cut price budget competition piling in and stuffing things up for IVC. Looks to have adapted or altered its strategy going by the price recovery happening though?

2018 was a bad year for IVC - 2nd consecutive year of decreasing death rates and it coincided with the renovation of funeral centers (which resulted in closure of funeral centers for 4-6 months on average), renovation now 35% complete. Their market share has actually gone up - but there is definitely competition at the budget end of the funeral business spectrum. IVC used to be in the big cities, but now they are expanding into the hinterlands (regions they call it).

In terms of share price - $18 end of 2017 to just above $10 in 2018. I chose to invest more in the downtrend and also participated in the recent share purchase plan..Let us see what happens. Update in May during annual meeting is keenly awaited and will determine the share price direction..

[Arbitrage]

Looks like the start of an upward trend for this share. It will be interesting to see whether the trend consolidates in coming weeks.

[ratkin]

Possibly on the off chance the corona virus spreads?

[Arbitrage]

Yes the share price has gone against the ozzie trend today. Was wondering whether there was a correlation there somewhere!!

[ratkin]

Yes the share price has gone against the ozzie trend today. Was wondering whether there was a correlation there somewhere!!

Yep, in theory not a bad sector to be in, need something to put an end to these decreasing death rates!!

[ratkin]

Fantastic result.

Deaths up 2.9% after a drop of 3.3% last year
profit up 50%

They can run from the grim reaper , but the can’t hide


EDIT
Up 15% on the day, and with what's coming expect quite a few to latch onto it.

[ratkin]

Thx arbitrage, was your post gave me the idea to buy in

[RRR]

Good result indeed. I have plenty, adding more by participating in the DRP.

The best measure of their core business is "operating earnings after tax", which excludes gains from pre-paid funeral funds-under-management. Operating earnings after tax is up by 19.3%.

[Arbitrage]

Buy in gloom....

[ratkin]

Buy in gloom....


On,y thing I am slightly concerned about with these is that if too many people start dying they may ban funerals, and restict the number of people that can attend etc. could reach the situation where bodies are going straight from the hospital to the crematorium, but maybe I am being a little pessimistic there.
I did see in Ireland though that there are restrictions on funerals already, and they are only at the early stage of the outbreak

[Arbitrage]

At the moment the market thinks otherwise.

[ratkin]

At the moment the market thinks otherwise.

Thats me out. Slight loss on the deal. Think the worries about funeral restrictions maybe coming into play and the director sales not a good look

[Arbitrage]

Ratkin was right in March 2020. Funerals and not deaths are a big source of income for IVC. Lesson learnt. However, the future post-covid looks a bit more settled.

[Arbitrage]

This has been a long term hold and is now back to pre covid levels with a current price of around $12.30. ASB has a Buy recommendation with an estimated valuation of $15.30. As Ozzie opens up funerals are back in business.