With all the price movement on InvoCare, I was tempted to have a...

With all the price movement on InvoCare, I was tempted to have a look at it in a bit more detail. I agree with most commentators that the macro trends look really good. But I struggled to simply write off some poor performance as Covid related. Since 2015 they have struggled with revenue growth; their CAPEX has lead to shareholder destruction and reduced their ROCE; their funds under management has been performing particularly poorly in past couple of years (low interest rates is really a problem for all companies with floats, just take a look at QBE).



To me it seems like growth has been over estimated, particularly considering there has been 30% shareholder dilution. Based on some moderately bullish assumptions, I could only get 1% CAGR over 10yrs. You can see here:



To flip that around and think about current valuations, I essentially needed extremely bullish growth rates of 8% CAGR and needed to reduce margin of safety to 0%..



The reason I think InvoCare has been falling behind is that their M&A business model is inferior to Propel Funerals. In a fragmented industry that is consolidating, they are performing better through acquisitive growth. Despite PFP having less brand awareness, poorer quality assets, and cheaper prices per funeral case (around $8k for IVC vs $6k for PFP), their margins are higher and they are eating market share,



Sorry, but not for me.. GLTAH.