Time Magazine Explains Why Death Services Are Suddenly Booming

May 31, 2015
1 Comments
Advertisement

Article by Ryan Vlastelica, Reuters

Baby boomers have a lot to do with it.

Advertisement

Companies that provide end-of-life services stand to benefit from what boils down to a macabre version of high demand as the U.S. baby boom generation approaches their seventies.

Roughly 2.6 million people died in the United States in 2014, up from 2.47 million in 2010, according to the Center for Disease Control, and demographic trends indicate that number will continue to rise.

Service Corp International, which operates funeral homes and cemeteries, has been a prime beneficiary of the aging population. Its shares have risen 27.7% in 2015 through Thursday’s close, on track for its sixth straight annual gain of more than 20%.

Among smaller peers with market caps below $1 billion, StoneMor Partners was up 16.4% year-to-date, easily outpacing the S&P 500’s 3% rise. Carriage Services was up 19.4% and on track for its seventh straight annual increase.
“The demographic trend will probably last a couple of decades,” said Charles Sizemore, chief investment officer of Sizemore Capital Management in Dallas, who owns StoneMor shares. “It’s morbid, but the time will come for every boomer, and the result of that is a very good backdrop for these companies.”

According to the National Funeral Directors Association, the median U.S. funeral cost $7,045 in 2012, the most recent year for which data is available. A cremation can cost less than half of that.

The NFDA projects 48.2% of 2015 services will be cremations while 45.8% will be burials. By 2030, though, it estimates that 70.6% of services will be cremations while fewer than 25% be burials.

“An urn is certainly cheaper than a burial plot,” Sizemore said, “but even if a larger proportion opts for cremation, there will be business for everyone, given the sheer number of deaths coming down the pipeline.”

The popularity of cremations could already be having an impact on other death-related companies. Matthews International Corp, which makes memorialization products like tombstones, is up 3.4% this year, underperforming Carriage and StoneMor. Hillenbrand Inc, whose Batesville Casket Co subsidiary makes coffins, is down 9.2%.

Also of concern for investors is the size of the companies. Not only do most have small market caps, but the group also tends to be thinly traded, making it difficult to buy and sell quickly.

While Service Corp’s 50-day average volume exceeds 1.1 million shares, the others trade well below that. Typically, fewer than 100,000 Matthews shares change hands daily.

“I understand the aging demographic thesis for this group, but they’re not nearly as liquid as I’d like,” said Adam Sarhan, chief executive officer of Sarhan Capital in New York. Sarhan closed out a position in Service Corp in March, saying it hit his target to take profits.

“These all look like strong stocks, and I’d expect all of them to see strong revenue growth,” he said, “but it is really tough to move serious money in and out when they trade this little.”
The biggest threat is not life-extending advances in medical technology, but instead a growing trend toward cremation, which is cheaper, Sizemore said.

CDFuneralNews

ConnectingDirectors.com is the leading online daily publication for funeral professionals with a reader base of over 45,000 of the most elite and forward-thinking professionals in the profession. With ConnectingDirectors.com we have created a global community through an online platform allowing funeral professionals to Stay Current. Stay Informed and Stay Elite.
Advertisement

You may be interested

Funeral Homes are Struggling to Keep Their Doors Open
Cremation
3 views
Cremation
3 views

Funeral Homes are Struggling to Keep Their Doors Open

Ryan Thogmartin - August 13, 2017

This is a topic and conversation that does not get talked about or covered enough. We all want to put the blame on cremation and ignore the fact that many of the issues facing funeral homes aren't because families choose cremation but because of bad business decisions of many funeral directors who don't want to change or accept cremation.

Jobs
2 views

Preneed Funeral Sales Advisor

CDFuneralNews - August 11, 2017

Premier Funeral Solutions is currently seeking a Preneed Funeral Sales Advisor . Premier Funeral Solutions offers tools and methodologies developed to help…

12 Benefits of Social Media Every Funeral Home Needs to Know
Marketing
3 views
Marketing
3 views

12 Benefits of Social Media Every Funeral Home Needs to Know

Ryan Thogmartin - August 10, 2017

Social media is 'marketing.' It's not the new marketing, it's the current state of marketing, and funeral homes and death care companies can no longer afford to ignore it. There are so many reasons why death care companies need to get their heads out of the sand and start engaging on the platforms used by over 68% of all Americans.

Comments