Bullboard - Stock Discussion Forum Park Lawn Corp T.PLC

Consumer Cyclical Personal Services

Park Lawn Corporation is engaged in providing goods and services associated with the disposition and memorialization of human remains. The Company and its subsidiaries own and operate businesses, including cemeteries, crematoria, funeral homes, chapels, planning offices and a transfer service. Its primary products and services are cemetery lots, crypts, niches, monuments, caskets, urns and... see more

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TSX:PLC - Post Discussion

Park Lawn Corp > More TD

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Post by retiredcf on Nov 02, 2020 8:26am

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Park Lawn Corp.

(PLC-T) C$27.68

Q3/20 Preview: Comparables and CDC Data Indicate a Strong Q3 Event

Park Lawn will report its Q3/20 results on November 12 after market close. The conference call will be held on November 13 at 9:30 a.m. ET (647-427-7450 or 888-231-8191; Conference ID: 7388398).

Impact: NEUTRAL

In our view, all signs are pointing to another strong quarter for Park Lawn. As we noted yesterday (link), both industry-leader Service Corporation International (SCI-N; not covered) and comparable Carriage Services Inc. (CSV- N; not covered) reported very strong Q3/20 beats on both the top and bottom lines and their respective share prices rallied on the back of the better-than-expected results. Additionally, we believe a positive Q3/20 outlook is further supported by U.S. CDC data on excess deaths (Exhibit 2), with total deaths in the U.S. in Q3/20 ~16% above expected levels.
We are raising our Q3/20 forecast to reflect our expectations for a strong quarter. Most notably, our forecast now implies a consolidated Q3/20 organic growth rate of ~9%, versus ~3% previously, and a Q3/20 Adjusted EBITDA margin of 24.1%, versus 23.1% previously. We have also made small tweaks to the balance of our forecast, including reflecting the recent acquisition of Bowers Funeral Service (announced October 1, 2020).
Following the revisions to our forecast, our Q3/20 outlook now falls slightly above consensus. We estimate Q3/20 revenue of $83.7mm (up 26% y/y) and Adjusted EBITDA (net of NCI) of $20.0mm (up 33% y/y), each ~3% above consensus of $82.5mm and $18.9mm, respectively.
We believe robust organic growth could carry into H1/21. We believe at- need volumes could remain elevated, particularly against a backdrop of rising COVID-19 case counts, while pre-need cemetery sales have been benefiting from increased leads due to the higher at-need volumes and with COVID-19 serving as a triggering event for individuals to evaluate post-death alternatives.

TD Investment Conclusion

We reiterate our BUY recommendation and $33.00 target price. We continue to view Park Lawn as a high-quality company in a recession-resistant business with a favourable industry backdrop (including demographic tailwinds), a strong near- and medium-term outlook, ample opportunities for growth through M&A in its highly fragmented industry, and a justifiable valuation.