Dignity Share Discussion Threads

[waldron] 19/1/2018 10:27

VIKING SEND OFF FOR ME PLEASE

[holts] 19/1/2018 10:19

Debt is the killer here unless financed at exceptionally low levels , if you are cutting your prices to that extent and your debt remains the same then its now a significant problem .

[waldron] 19/1/2018 10:18

BUR SOME MIGHT THINK THAT PROBLEMS PERSIST IN FOLLOWING AREAS

THE ABILITY TO PAY A DIVIDEND

INTANGIBLES MIGHT NEED REVALUATION

COMPETITORS TAKING MARKET SHARE

[waldron] 19/1/2018 10:07

OLD NEWS



SURELY NOT IN ITS DEATH THROES

SURELY A PHEONIX TO RISE FROM THE CREMATORIUM ASHES

DO NOT DESPAIR PERHAPS A BUYING OPPORTUNITY

[eastbourne1982] 19/1/2018 09:56

Fall today looks massive however the update was terrible and debt is just too high.

Debt may now be 10 - 15 times profits going forward.

This clearly isn't a comfortable situation.

[its the oxman] 19/1/2018 09:55

Lots of uncertainty now so no reason to buy. Think the share price will drift away further over the months ahead.

[waldron] 19/1/2018 09:52

A GOOD LONG TERMER IF A DIVIDEND PAID FOR LIFE

[waldron] 19/1/2018 09:48

Dignity to drop funeral prices, issues profit warning for 2018
08:04 19 Jan 2018
In a bid to preserve market share, the company is dropping the price of ‘simple’ funerals and freezing the cost of most ‘traditional’ funerals.
woman at funeral standing by coffin
RIP 2018 profit margin

UK funeral services firm Dignity Plc (LON:DTY) has told investors that results for 2017 will be in line with expectations, but, at the same time it cautioned over its 2018 performance.

It highlighted that the group’s pre-arranged and crematoria businesses are performing strongly, but, also noted a continuing acceleration of price competition facing in the funeral business.

Consequently, the company said it is now taking decisive action on its pricing strategy, in order to protect market share and “repositioning for future growth”.

Dignity said results for the year, to December 28 2018, will be “substantially below the market's current expectations.”

A price of a simple funeral will reduce by an average of 25%, meanwhile, the group’s traditional funeral service will see a price freeze in the majority of locations.

In light of these actions, Dignity now intends to embark on a rigorous review to ensure that its funeral operations are organised to run more efficiently and effectively.

“The board believes that the combination of ongoing albeit slightly reduced volume erosion; the freeze in the traditional funeral pricing; the reduction in the simple funeral price; the likely change in mix; the increasing proportion of funerals that have been pre-arranged and increased promotional expense, will lead to substantially lower profits in 2018,” the company said in a statement.

“The new balance between volumes and margins will take time to become clear and the group expects to provide an initial update on these estimates and its progress when it releases its interim results in August 2018.”

[gripfit] 19/1/2018 09:47

funerals are a necessity ,,, but costs !! its about time the sector had some competition, the service is overpriced.

[mozy123] 19/1/2018 09:42

My worse ever share purchase, however the scale of the business and network should enable it to recover over time. What this company needs to protect its large network is regulation, as clearly it cant compete effectivly when aquisitions start a new business after being taken over. It also needs to quickly ramp up its online presence. Im still sceptical that family members go bargin hunting when it comes to loved ones deaths. I certainly didnt.

Time will tell of course.

[mally6] 19/1/2018 09:29

Will be back up big overeaction still a solid company

[wiganer] 19/1/2018 09:19

Might be worth a nibble if it hits 500

[salpara111] 19/1/2018 09:07

Interesting, I bought Dignity when it floated but sold years ago when it got to £7 I then watched in amazement as the stock continued to climb to the point that its yield was considerably less than a Gilt which said to me that it was seriously overvalued.
It would appear that price transparency is starting to enter the industry with online services which means a permanent reduction in profitability.
The current market cap also means that it will have no hope of staying in the FTSE 250 which means that the tracker funds are going to have to sell out.

[warranty] 19/1/2018 08:58

I think this company Maghreb soon need an undertaker for itself. Definitely not a recovery stock.

[imastu pidgitaswell] 19/1/2018 08:54

Blimey.

It's a very highly leveraged business that has just flagged that its operating profits will be slashed by, erm, they don't know. Headline prices cut by 25% (nice round number, is that it? Competitors, local markets, affordability? No, just '25%' as it's a simple number - are they amateurs?)

Net debt of between £550m and £600m, albeit long term, with a (last time out) operating cashflow of £81m - to be reduced by whatever the impact of the pricing strategy change is. Likely to be at least 40%, as the operating model when you slash headline income by 25% will result in much larger hit to income after costs. And frankly their prices are still considerably higher than their competitors - no reason to believe they will increase volumes, they are more likely to continue losing volumes, albeit maybe by less.

50% off the share price is perfectly sensible as a reaction - I might have expected more.




Just looking back up the thread - well done James, not just with the forecast of the fall, but for the right reasons. Also enjoyed the analyst forecast a couple of months ago (in 1187) - I always love an analyst talking drivel...

[davidtranter] 19/1/2018 08:52

Looks like that James Dunn fella was right all along.

[eastbourne1982] 19/1/2018 08:39

Too much debt relative to much lower profits ?

Bank covenants issues ?

[sandeep67] 19/1/2018 08:38

Terrible overreaction. Peeps won't stop dying, but preemptive action is good here to protect business

[bulltradept] 19/1/2018 07:31

Looks like the IC called this one right, for once. A recovery stock after 2019 perhaps?

[hydrus] 19/1/2018 07:11

Essentially the previous model is out the window and they can't say what the new model will look like other than there will be a permanent reduction in profits. I wouldn't be surprised if this near enough halved today. Especially with the debt

[kkclimber56] 11/1/2018 19:11

what is happening? I would have though the collapse in the NHS would be great news for Dignity

[bscuit] 10/12/2017 23:47

Methinks the business model has similarities to MITIE.... and what happened there...

[ariane] 10/12/2017 17:22

Funeral director group Dignity is one to "avoid" said the Sunday Times' Inside the City column. Rising competition from rivals is the main concern for shareholders, even more than comments that death rates were levelling off. As well as an ongoing bolt-on acquisition campaign, Dignity has been growing the top line every year since it floated 13 years ago thanks to the industry's ability to keep increasing prices, which has led to the average cost of a funeral topping £4,000 these days. Dignity's sales are forecast to reach around £326m this year, from £313.6m last year and £305.3m the year before.

The FSTE 250 group's recent caution about competition it undoubtedly linked to the rise of price comparison websites such as Funeralbooker, which has even boasted that it is shorting Dignity's shares. Analysts warn that Dignity’s method of acquiring dozens of smaller funeral homes has not given it the significant gains in market share it might have expected as vendors often set up again as a new, cheaper rival. Management have two choices: keep focusing on the top end of the market or chase cheaper business.

[speedsgh] 24/11/2017 13:59

Sell out of Dignity -

IC VIEW
The share price fell following the recent third-quarter update and, unless Dignity can clearly maintain its market position, we think there could be further pain ahead. True, the shares have already de-rated and look attractive compared with historic levels. However, the forward PE ratio of 14 leaves room for the shares to de-rate further, especially if forecasts are downgraded, which we think is looking increasingly likely. And while we don't see any immediate reason for concern about debt levels, the fact Dignity's balance sheet has a likeness to that of a reliable utility could prove a headache if its earnings succumb further to the kind of competitive pressures we're more used to seeing in the grocery sector. While the company adapts to changes in its end markets, we think investors are best off out of it. Sell.

[its the oxman] 22/11/2017 10:05

Guess after such a good run with company seeing increased competition, it's the fear of a profit warning.