Propel Funeral Partners (ASX: PFP)Share Price and News
About Propel Funeral Partners
Propel Funeral Partners (ASX: PFP) is a leader in the Australian funeral services industry, providing a comprehensive range of funeral care solutions through its various providers.
The company operates a network of funeral homes, crematoria, and cemeteries across Australia and New Zealand; and is Australia's 2nd largest provider behind Invocare.
Propel Funeral Partners History
Founded in 2012, Propel Funeral Partners was established with the goal of consolidating the fragmented Australian funeral services industry. Many of its franchises go back several decades, however. It is 14.8%-owned by co-founders Fraser Henderson and Albin Kurti.
In FY24, PFP delivered $209.2m (up 24%) and an NPAT of $23.4m (up 12%). It paid 14.4c per share, representing a 2.5% yield and a payout ratio of 85% of distributable earnings, off the back of 21,655 funerals although this figure was inflated by M&A activities. Average Revenue Per Funeral was $6,635.
Since listing, the company has spent $295m on mergers and acquisitions and this has enabled the company to grow from an idea to being a major industry player.
Future Outlook of Propel Funeral Partners (ASX: PFP)
Looking ahead, Propel Funeral Partners is well-positioned to capitalise on the steady demand for funeral services. With an ageing population and increasing awareness of pre-arranged funeral plans, the demand for funeral services is expected to remain strong.
To state the obvious, death is one of life’s two certainties. But it is also worth noting that funerals are a 24-hour, labour-intensive business with extensive planning and various facilities. And none of this comes cheap. Deaths in Australia are set to continue to grow in the years ahead. And Propel is the 2nd largest provider in the market with operations in 144 locations.
At the same time, it ought to be noted that deaths can fluctuate from year to year. The 2019 flu season was a good time for Propel. The start of the pandemic actually ended up being a bad time for the company because social distancing meant less deaths from the flu. Things changed once social distancing measures were dropped, however. And it showed in the company’s share price and results.
Is PFP a Good Stock to Buy?
When assessing whether Propel Funeral Partners is a good stock to buy, several factors need to be considered. The company operates in a defensive sector, which typically performs well during economic downturns, providing some degree of stability. Propel’s strategy of expanding through acquisitions has enhanced its market presence and should continue to offer growth opportunities. The stock is valued at a reasonable multiple compared to industry peers.
While it is not overly cheap, the company’s steady revenue stream and strong acquisition strategy support its long-term valuation. Investors may find appeal in Propel’s dividend payout, which has consistently grown as the company expanded. Its steady cash flow allows the company to maintain an attractive dividend yield, making it a good choice for income-seeking investors. Although the funeral services industry is considered relatively recession-proof, Propel faces risks such as changes in consumer preferences, regulatory shifts, and economic disruptions.
However, its diversified operations across different regions help mitigate these risks. Propel’s continued expansion through strategic acquisitions positions it well for future growth, as it enters new markets and diversifies its offerings. Broker analysts view Propel positively, with many recommending it as a buy due to its solid management team, stable revenue base, and strong growth prospects.
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Frequently Asked Questions
Propel Funeral Partners offers a steady dividend yield, supported by its strong cash flow and growth in earnings. The company has consistently increased its dividend payouts, making it an attractive option for income investors.