If you are an investor in the public stock markets — and most people are now with the advent of IRA’s and 401k plans — you would more than likely be pleased with the growth of your investment had you simply followed an investment strategy of investing in the index of stock market holdings in the Dow 30, the NASDAQ, and the S&P 500.

From the period of January 1, 2024, through the final trading day of the year, December 31, 2024, those market indexes grew by the following percentages:

• Dow 30:       +13.6&
• NASDAQ:    +32.3%
• S&P 500:     +25.2%

If you invested in equal shares of the four publicly traded companies that comprise the Funeral Director Daily Death Care Index (DCI) you would have ended up with a total stock appreciation return of 14.9% for the same time period.  That is down in the last month from December 2, 2024, when Funeral Director Daily published this article showing that at that time the return stood at 24.3% year to date.

However, like many public companies, December 2024 was not kind to the stock prices of Death Care stocks for what could be many reasons, including year-end profit taking.  As a matter of fact, all four companies that comprise the DCI ended 2024 with a lower stock price than they reflected on November 30, 2024.  Those four companies include Service Corporation International (SCI), Carriage Services, Matthews International, and Security National Financial Corporation.  The combined share price of one share of each of those companies stood at $172.38 on November 30, 2024, and had fell to $159.38 on December 31, 2024.

The good news however, is that they started 2024 at a combined price of $138.68 and ended the year at $159.38 — an increase of 14.9% on the year.

If you are wondering how those Death Care companies fared on an individual basis here is a chart:

Three of the four Death Care Index companies had price appreciation in their stock prices during 2024 with Carriage Services gaining a whopping 59.3% on the year.

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  When I talk to people about the “Death Care Industry” my perception is that most people are bullish about the profession and its movement forward. . . .especially with the fact that the number of deaths per year going forward is virtually guaranteed to rise because of the ageing of the American demographic.

However, balanced with that “positive trend” moving forward is the growing implication that many of the future deceased and their families may choose to spend less than today’s current amounts on their final arrangement services.  I don’t think that potential unknown of “funeral spend” is lost on the investing community.

That “teeter-totter” of thought, if you will, is what I think guides many investor’s decisons about their investment in funeral service.  I also think that may be one of the reasons that investors have been investing in Carriage Services.  If there is an eventual lessening of “funeral spend” in the years to come, those companies who have their debt in check will be in better situations than those that don’t.  Carriage Services has been very forward in talking about how they are getting their debt under control . . . and that may resonate with the investing public.

Here’s what Kathy Shanley, Carriage Services Chief Accounting Officer said of that commitment in the company’s October 31, 2024, Earnings Call, “We paid $15 million towards our outstanding debt this quarter as we continue to drive down our leverage ratio, which is now at 4.3x, down from 5.3x at Q3 of 2023. This reduction in leverage illustrates our commitment to disciplined capital allocation. . . “

Carriage Services had a new CEO named in June 2023 when Carlos Quezada was put in that position.  He was the first CEO to replace founder Melvin Payne who had been in that position since 1991.  I think investors have seen how Quezada and his team have seemed to put in place a patient and deliberate plan to put the company in the best position possible as Death Care moves forward with probable generational changes coming to the business over the next decade and beyond as more options for dispositions, celebrations, and memorializations come to pass.

For decades the mantra in growing funeral service companies has always been about “growing revenue” to increase cash-flows.  Maybe the investing public is changing to a more balanced approach about not only growing revenue but including a “watch your expenses” attitude to grow that cash-flow.

Disclaimer–  The author of this article for Funeral Director Daily is a shareholder in Service Corporation International, Carriage Services, and Security National Financial Corporation.

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