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InvoCare Limited (ASX:IVC) share price up 2.7% on another acquisition

The InvoCare Limited (ASX: IVC) share price has gone up 2.7% today after announcing another acquisition.

As a reminder, InvoCare is the largest funeral provider in Australia and New Zealand.

Today, InvoCare announced that it has entered into a conditional sales agreement to acquire the business and assets of Archer & Sons Funeral Homes based in the south west region of Western Australia.

InvoCare said that this acquisition is anticipated to be completed on 20 July 2018.

Archers operates in two sites located in Bunbury and Manjimup. The acquisition includes two fully operational funeral homes with mortuary facilities.

The business conducts around 330 funeral services and generates revenue of around $2.4 million per year.

It has been operating in Western Australia for almost 30 years and it has a good reputation in the region.

Martin Earp, InvoCare’s CEO and Managing Director said “Archer & Sons Funeral Homes provides us with another high-quality business to continue the growth of our regional strategy by building on the success of a business that is well established in the local community.

“The south west region of Western Australia has significant potential for growth and we look forward to working with the Archer Family to ensure a smooth transition and identify further opportunities to service families in the surrounding tows and districts.”

Is InvoCare a buy?

InvoCare has now announced:

  • English Rose with $0.7 million of revenue
  • Lester & Son with $3.5 million of revenue
  • Hope & Sons with NZ$5.8 million of revenue
  • Whitestone with NZ$1 million of revenue
  • Southern Highlands with $0.7 million of revenue
  • J A Dunn with $1 million of revenue
  • And now Archer & Sons with $2.4 million

This means that InvoCare has now acquired over $14 million of annualised revenue and this is around a 3% increase of FY17’s revenue. This is a sizeable increase of revenue and could boost FY19 profit nicely.

InvoCare is trading at around 26x FY18’s estimated earnings. It certainly isn’t cheap but I think the long-term outlook is positive due to the ageing demographics. I’d be happy to buy a parcel at today’s price, but it would have been better at $12.50.

For now, a better-valued business could be this exciting share that is predicting profit growth of 30% in FY18 alone and it’s now expanding into Asia.

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Motley Fool contributor Tristan Harrison owns shares of InvoCare Limited. The Motley Fool Australia has recommended InvoCare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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