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HY19 reported: Is the Propel share price a buy?

Is the Propel Funeral Partners Ltd (ASX: PFP) share price a buy after its HY19 report? The Propel share price went up 2% in reaction to the figures that were revealed today.

Propel reported that revenue grew by 20.9% compared to the prior corresponding period, to $47.1 million.

Average revenue per funeral was $5,549 in the first half of FY19, which was 2.2% higher compared to the prior corresponding period. Like for like average revenue per funeral growth was 3%, which was within the company’s target range of 2% to 4%.

During the half year Propel performed 5,644 funerals, which was 11.7% more than the prior corresponding period. However, the funeral industry was going through below trend funeral volumes due to a benign 2018 flu season. Propel said that Tasmanian deaths were down by 15.4%. Propel said that there 509 less like for like funerals than last year, but it expects the $3.7 million like for like revenue will be deferred, rather than lost, to future periods.

Operating earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 6.4% to $11.7 million and operating net profit after tax (NPAT) increased by 1.3% to $6.4 million. Reported NPAT grew by 3.6% to $6.4 million. Earnings per share (EPS) also grew by 3.6% to 6.5 cents.

Propel decided to declare an interim dividend of 5.7 cents per share, which represents approximately 75% of Propel’s distributable earnings.

Propel’s Outlook

For the rest of FY19 Propel said it’s well placed to benefit from acquisitions completed during FY18 and the first half of FY19, additional planned acquisitions and funeral volumes returning to normal.

Comparable volumes were up during the first seven weeks of 2019, however death volumes are expected to fluctuate over the short-term horizon.

Propel is currently trading at under 23x FY19’s estimated earnings. The Propel share price is not cheap, but it could be a decent ultra-long-term pick due to Australia’s ageing population. I’d have preferred to buy shares a few months ago, but the current price could be a decent time to buy

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Motley Fool contributor Tristan Harrison owns shares of Propel Funeral Partners Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. 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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