Park Lawn Corporation (PLC) Stock Analysis and Review

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Park Lawn Corporation (PLC) has been on the minds of investors for some time now. Is this stock still a good buy?

To help you with your research, our friends at Capital Ideas Media have published two interviews with the company's CEO, which you can stream below or view directly from their site.

Park Lawn is also a company that we have thoroughly analyzed here at 5i Research. Below you will find our in-depth review of Park Lawn, and you can also view additional insights in the full report by signing up for free 30-day access to 5i Research. You'll also receive unrestricted access to 70+ additional reports on the top stocks in Canada, three model portfolios, and access to the 5i Q&A section where you can get answers directly from the 5i Research Team.

Already a member? 5i members can view and download the entire report here, as well as view all the questions and answers about Park Lawn in the Q&A section here.

Regarding the interviews below:

The interviews were conducted at an earlier date, so while some of the numbers mentioned may require updating, the information provided about the company is still relevant and can be useful in conducting your own due diligence.

Capital Ideas Media - Park Lawn CEO Interview (2018)

This interview is from April 19th, 2018.

Park Lawn CEO Interview (2017)

This interview is from August 17th, 2017.

Stock Review of Park Lawn Corporation (PLC)

In addition to the review below, you can also learn more about the company by taking a look at our Park Lawn (PLC) Company Stock Page.

The analysis below was conducted on June 27, 2018.

Company Profile

PLC is the only Canadian publicly listed cemetery, funeral and cremation business. The company operates in Canada and the USA. The company and its subsidiaries own and operate 139 businesses including cemeteries, crematoria, funeral homes, chapels, planning offices and a transfer service.

PLC’s products and services, such as cemetery lots, crypts and funeral services, are sold to clients on a pre-planned basis (pre-need) or at the time of death (at-need). PLC has grown from only 9 businesses in Ontario in 2013 to over 139 businesses all over Canada and the US since the new management took over in 2013.

Revenue Mix

Revenues are derived from the following sources: sales at 90.0%, income from care and maintenance funds of 7.1%, and interest and other income of 2.9%. 75% of revenues are from cemetery and cremation while roughly 25% are from funeral home services.

The majority of funeral services are sold ‘at-need’ while the majority of cemetery business (80% to 90%) is sold ‘pre-need’. There is a higher proportion of gross profit on the traditional funeral business than on most cemetery and cremation revenue.

One of the fastest-growing trends in the Death Care sector is cremation. PLC operates funeral homes in the Toronto area, which has allowed it to become a market leader in cremations in the city with over 50% market share.

Of ‘pre-need’ sales, approximately 70% to 80% are composed of cemetery plot sales while 20% to 30% make up funeral home services. PLC is required to contribute a portion of all lot and crypt sales to the care and maintenance trust funds in accordance with regulatory requirements.

Growth Plans:

The company growth strategy includes organic initiatives and acquisitions in the highly fragmented death care market. Acquisitions are expected to contribute to roughly 60% - 70% of the Company’s growth with organic growth making up the difference. Within the cemetery space, acquisition growth looks to be focused on US based crematoria, cemeteries and funeral homes.

On the organic growth side, PLC plans to develop and expand current cemeteries with a target internal rate of return of 20%. Most organic growth in the funeral home business will come from expense reductions and efficiencies. PLC targets a 20% EBITDA margin in this space. During 2017 and 2018, the company announced several important business acquisitions.

The acquisition of Saber Management, which owns nineteen cemetery properties and four funeral homes, located in Kentucky, Texas, and Illinois, further increased the number of cemeteries in the company’s portfolio, added funeral home assets into its U.S. operations and further diversifies geographically the company’s U.S. operations.

The acquisition of CMS Mid-Atlantic also increased the scale and geographic diversification in the U.S. market. Taking more of a higher level view, management expects higher growth in the cremation segment, with growth rates rising from 2010 to 2020 to a level of 54% from 41% in the US. Within Canada, population ages 65 and older is expected to grow materially in the foreseeable future and is a similar demographic trend in the US which should support demand for services.

Historically, since Q1 2017, PLC has grown adjusted EBITDA at a rate of 74% annually while maintaining a payout ratio in the 45% range.


PLC is currently trading at 24.4x forecasted earnings a premium to peers at 17.6x but is more in line based on EBITDA at a level of 14.47x. The dividend is sustainable and the balance sheet remains strong even after the recent purchases by PLC.

We like the flexibility that PLC is maintaining and it shows management’s ability to grow responsibly, in our view. We believe the premium is warranted as acquisitions are streamlined and efficiencies and margins are expanded not to mention the core business being one that should not really be impacted by much at all and in turn be a recession resistant business that can at least grow with GDP/population.

With the renewed focus on earnings growth, a healthy balance sheet, a potential for significant EBITDA growth, and a decent dividend yield we view the valuation as fair at these levels.

Key Risks

An essential part of PLC’s strategy is dependent on its ability to identify suitable acquisition targets in both new and existing markets. In addition, PLC should also be able to successfully integrate the acquired businesses. With the increasing number of acquisitions made and the fragmented nature of the industry, there are always integration risks.

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Disclaimer and Disclosure:

The opinions expressed in this report are the opinions of the analyst about this company and industry. Neither the analyst nor any employee of 5i Research own any shares of the subject company and does not offer shares for sale of the subject company. No fees were paid by the subject company to 5i Research for the production of this report. The analysts who produced this report are required not to trade in any Canadian security. This report is solely for informative purposes, and is not a solicitation or an offer to buy or sell any security. Any descriptions or forecasts contained in this report were independently prepared and have not been endorsed by the management of the subject company. The information contained in this report has been compiled by 5i Research from sources believed to be reliable. However, 5i Research does not make any warranties, express or implied, as to the fairness, accuracy, completion or correctness of the information contained herein, nor the results to be obtained from using this information, and makes no express or implied warranties or fitness for a particular use. All estimates, opinions and other information in this report constitute the analyst’s judgment as of the date of this report, and are subject to change without notice, and are provided in good faith but without legal responsibility or liability. Anyone using this report assumes full responsibility for whatever results they obtain from whatever use the information was put to. Consult your financial advisor before you invest. Whether a stock should be included in a portfolio depends on one’s risk tolerance, objectives, situation, return on other assets, and other factors. You may not redistribute, alter or transmit this report in any way to any other party without the express permission of 5i Research.

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