Dignity Share Discussion Threads

[melody9999] 04/10/2006 00:11

Hectorp - there is no other company I would recommend more for a solid 'sleep at night' investment. Well managed, with opportunities to grow further. If you consider this really is a low risk play, and then consider almost 100% share price increase (including £1 special dividend this year) in 3 years, the risk /return is very good IMHO..... and no reason to believe this will change going forward. I hold and will continue to do so unless something very unlikely happens to the company or the market.

[llados] 03/10/2006 12:35

Pre war baby here and happy to hold for long term, or until my heirs find my internet stockbroking account and cash in!! lol

[davpat] 03/10/2006 10:11

Another wartime baby here! Remember this is a defensive stock, no fireworks. Buying continues this am. Good long term management strategy. Very happy to hold.
DAVPAT

[kallista] 03/10/2006 08:49

Hey Edmondj.....watch it.

I was born at the height of the post-war baby boom and I have no intention of looking up St. Peter for a good few years yet.

[blueledge2] 03/10/2006 08:44

Theres always bird flu

[edmondj] 03/10/2006 07:55

I can't believe the death rate will be declining, surely with the baby boomers peaking out...?

Admittedly that's longer-term re. death rates, but key.

[hectorp] 03/10/2006 07:49

Its too quiet here. Has everyone died?
still contemplating a small investment for my Sipp, but with less folk dying its not the best time perhaps.

[gorilla36] 15/9/2006 19:09

.......that'll be the kiss of death then!!!!!!!

[gorilla36] 15/9/2006 08:35

Int The Times Today - Tempus Column


Dignity

DIGNITY has brought the business of death to the market and has proved anything but solemn for its shareholders. Its shares have more than doubled since its April 2004 flotation.

With the average Dignity funeral costing £1,700, the company produced underlying pre-tax profits up 12 per cent at £17.2 million, ahead of City forecasts. The funeral provider now has a 12 per cent market share and has also linked up with big financial services groups to sell prepaid funeral packages, increasing visibility over future earnings.

However, the market for funerals is weakening. The death rate fell by 4 per cent last year, in part as a legacy of the Second World War. There are signs that the rate of decline is easing and by 2012 the market should return to growth.

The next opportunity for Dignity is to take on the running of local authority crematoriums.

The group this year made a 100p special dividend payment to shareholders through a securitisation and there is scope for further payments. Dignity combines defensiveness with predictability. Buy.

[m.t.glass] 14/9/2006 19:03

...Investec said that it sees nothing likely to halt Dignity's progress over the next few years and the combination of defensive, predictable and high-quality mid teens earnings growth more than underpins the premium valuation. It said that the management team has earned an excellent reputation and this is reflected in the valuation attached to the stock. It retains a 'buy' recommendation with a 12-month price target of 680 pence.

[m.t.glass] 14/9/2006 18:56

Beat expectations. Slightly.

"..Dignity spends around 6-10 mln stg to buy "around half a dozen" independent
funeral homes each year, said Hindley. "There are about 4,000 funeral directors in the UK," he said, and about a quarter of those are the group's potential targets.
Funding for these deals will be internally generated. At end-June, Dignity
has cash of 132 mln stg. The funeral service business is the group's main money spinner, with revenues there gaining 5 pct to 62.8 mln stg in the first half even at the back of a 1.1 pct fall in the number of funerals it conducted.
Dignity has 12 pct of a "very fragmented market", a level which it hopes to
grow through acquisitions, added Hindley. It has acquired two funeral home locations at the half-year period..."


Not in any rush, then.

[melody9999] 13/9/2006 19:06

BB - I don't disagree - I have this in my SIPP so I'm hoping it is long term! My point really is that until there is some major change in the fortunes of the company, management or some external factor, there is no reason for me to sell. You would rightly argue that for the first 6 months of 2006, the share price channelled -that might happen again - but even if it does then in the long term it is still a hold. I took the £1 per share as an opportunity to top-slice as, with the share price increases, DTY was looking a bit heavy in my portfolio.

[bingobingy] 13/9/2006 17:02

melody, with all due respect, you can't ignore the earnings. It would be unrealistic to expect strong organic growth, and based on that, it looks expensive in the short term. As a defensive long term play, it's a definite hold. I would imagine the results to be inline with expectations, and therefore already priced in. We'll see.

[melody9999] 13/9/2006 15:20

Results should be interesting tomorrow. With regard to PE around 20, I don't take too much notice of PE ratio nowadays. The chart above says it all. If you ignore the £1 dip when we receieved that amount back per share owned, then its really been smooth sailing all the way. Translate that into a quality company with great management and a product that unfortunately will always be in demand. I'll just keep on holding because it seems to work here!

[bingobingy] 11/9/2006 17:19

Gutted, sold yesterday as I thought earnings multiples of 20+ offer little upside in the short term. I'll stick by my guns though. Was in since 265 so can't complain. Good luck all.

[fellowes2] 11/9/2006 16:55

Fantastic day for holders and more to come IMO.

[m.t.glass] 11/9/2006 10:35

Interim results for the half year to 30 June, due Thursday

[fellowes2] 11/9/2006 09:32

Getting ever closer to breaking through the £6 level

[verynervy] 08/9/2006 08:12

Everyone`s always getting me!

[melody9999] 07/9/2006 14:54

Especially if the market gets nervy again and turns more defensive

[fellowes2] 05/9/2006 14:20

Looks like the £6 level will be broken through shortly,
this looks increasingly good in the run up to results.

[gorilla36] 05/9/2006 08:28

Interesting piece on iii a few days ago:

By contrast, Dignity (DTY), the UK's leading funeral services group, operates in a rather unique area of essential spending. Some families may be able to plan funerals in good time and with careful financial planning, but fate does not offer that luxury to most people. In the circumstances of bereavement the majority want to progress quickly and respectfully with funeral arrangements. Moreover, the cost of funeral arrangements and tributes are deductible from the value of the deceased's estate. With UK demographics pointing to an older population, the prosperity of funeral directors looks intact. In terms of scope for a quoted company, this business is a classic fragmented industry with a lot of smaller, private, family firms. A quoted company acquirer can sometimes bring improvements in operating culture, financial control, and overall support (limousines, crematoria etc). All these points help to explain why Dignity's share price chart shows a strong bull trend since the FTSE SmallCap shares listed in April 2004.

The company's robust commercial momentum means that in the first quarter to end-March 2006 operating profit rose by 10.2% to £14 million on turnover up 5.9% to £41.4 million. "Customer satisfaction remains high and this continues to underpin our performance," the chief executive said. Dignity instills a strong culture of customer care throughout its operations so that funeral arrangements run smoothly - especially as the vast majority are required at short notice - and the company goes as far as posting customers a satisfaction survey afterwards.

An excellent set of 2005 results were achieved despite a lower than expected UK death rate (down from 574,500 in 2004 to 563,800 in 2005) and a comparative reporting period that was one week shorter. Normalised pre-tax profit rose 17% to £25.9 million on turnover up 6% to £143.2 million. I put this down to the management understanding and delivering on three key criteria for success in this business as a quoted group: customer care, cost control and value-accretive acquisitions.

Unlike most companies that say they give shareholders 'a return of capital' via share buy-backs in the market (thereby boosting earnings per share and directors' compensation awards), Dignity has done the real thing by distributing £80 million or £1 per share in August. To be objective here, this resulted from a re-organisation of capital structure to make it more efficient, with an £86 million (net) issue of loan notes last February. A prospective yield of 1.75% means that Dignity has sound cash flow and financial controls but is not really an income share - nor, on about 20 times forecast earnings, is it a short-term trading play on the 14 September interims. You need to satisfy yourself on its prospects for long-term capital growth.

Future development will continue to include acquisitions that can deliver returns in excess of the cost of capital, and organic growth is being actively pursued. On the crematoria side, partnerships are being explored with local councils and the range of memorial and interment options within crematoria and cemeteries are being extended. The pre-arranged funeral side is seeking further partners. Various facilities and vehicles have been significantly upgraded to maintain its UK leading brand reputation. Ahead of the interim results a prospective investor has to take these qualitative aspects on trust, hence it will be interesting to see the financial proof on 14 September.

From dignityfunerals.co.uk you can learn more about the group's background and services. The management is adept financially, having taken the business private in 2002; eight years after it had been created bringing together quoted groups such as Plantsbrook and Great Southern. The dependable financial characteristics of the funeral business meant a good opportunity for a leveraged buyout. The group's re-flotation two years ago raised £113 million net to repay expensive debt, and at an uncertain time for the UK economy, currently, investors are favouring Dignity's financial profile.

At 555p the market price is at an all-time high, up from 233p after flotation in spring 2004 and 437p this year, capitalising the group at £444 million. The prospective price-earnings multiple is 22.5 falling to 19, for 2006 and 2007 respectively, based on the average of two recent forecasts from company broker Panmure Gordon (EPS of 24.2p and 27.3p) and Investec Securities (EPS of 24.9p and 31.0p), both of whose stances is 'buy'. As investors sift the market for genuine quality earnings, this kind of rating may well continue to be seen as worth paying for.

A disciplined stance is tricky. It is hard to establish a firm price target from 555p such that you can be sure of a margin of safety. The case for buying Dignity shares is based on a large element of respect for the track record, sound prospects and 'what the market is likely to favour'. In respect of a momentum case, it is hard to see what could puncture the investment rationale for Dignity: this is an essential service business where it is hard to envisage something drastic going wrong.

So as investors switch from consumer shares exposed to discretionary spending, a key short-term issue for Dignity is whether they will balk at paying over 20 times forward earnings. In the fullness of time a quality growth share can re-pay this; although intrinsically it is already demanding for a company progressing towards a £500 million market value. The interim results will be a key test of the investment rationale. Conservative investors may feel cautious about the p/e but momentum players should be able to exploit further upside if Dignity can continue to distinguish itself over the next year or two.


Gorilla

[verynervy] 04/9/2006 08:14

Seat belts tightened?
We have lift off!

[davpat] 01/9/2006 11:21

We're getting awfully near a break-out here chaps! (Ignore ADVFN chart.) Results two weeks away should throw some light on things.
DAVPAT

[melody9999] 27/8/2006 23:48

potential buyers should not be put off by ADVFN chart mis - representation caused by recent £1 per share hand out as mentrioned in above posts