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StoneMor Partners L.P. Message Board

  • jfd1966 jfd1966 Feb 3, 2011 5:54 PM Flag

    Peer Valuations

    Stonemor's valuation is extremely out of line with the other publicly held funeral home and cemetery operators.

    SCI, STEI and CSV all trade at enterprise to revenue multiples of approximately 1.8x. The market is currently valuing STON at approximately 3.5x revenue.

    These other companies also trade at approximately 7 - 8x cash flow. STON is valued at 17x cash flow.

    I believe the fact that STON pays all its cash flow out as a distribution has attracted investors to the stock that are not familiar with the industry or it's typical valuations and this has pushed it's share price above it's intrinsic value. There also appears to be several blog sites that have written positive articles on STON which probably added fuel to the fire.

    I believe the stock is severely overvalued and will eventually drop to a valuation of of $10 - $15 so that it is more in line with it's industry peers. The recent announcement of insider's selling 1.8 million shares seems to show they are using similar calculations.

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    • u_thoughtyou_were_smart u_thoughtyou_were_smart Mar 16, 2011 10:21 AM Flag

      At $19, STON will be a hold! Shame on management for selling shares, while creating a smoke screen with that secondary offering. It should be a crime, but it is legal.

    • Now Ston is acting like a funeral stock...down.

    • Just skimmed the report. Wow, very thorough and detailed covering all bases. I look forward to spending time reading the 150+ pages at a more leisurely pace. Everyone interested in MLP's should do the same. Thanks for providing this very valuable and informative tool!
      bob

    • I'm not sure we disagree at all. There may be some difference in our level of comfort.

      Additionally, I find your arguments thoughtful and cogent.

      All I am looking for is good intellectual banter supported by facts. Your opinion that Ston is a recession resistant play is certainly not unreasonable.

      I thank you for your point of view and wish you well.

    • If you dont believe ston is a ressesion resistent company that stands to benifit from the aging of the baby boomers then you and i will have to disagree.

    • I would think that the trust funds generate income for Ston that you are not considering.It may be like the float of an insurance company.They take in premiums,invest the money and derive income untill they have to pay a claim.The pre payments received by ston may well be the equivalent of an insurance company's float.

    • Jack,

      The man who knows everything.

      If the funds are in trust, exactly how do they distribute them? There only mechanism is to borrow against the assets. If you do not believe that increases risk, I have nothing else to say. Additionally, please explain why they keep borrowing on their revolver and paying it down through equity offerings.

      For the record, I am not a short. I don't even necessarily think Ston is a bad investment. Their current valuation concerns me and personally, your absolute certainty and arrogance combined with your limited knowledge insults me.

      With regards to the investment houses signing off on the secondary providing certainty (in any manner), have you lived on this planet during the past, oh say, 30 years? Has there never been a situation wherein these houses have done something shortsighted and/ or that was a conflict of interest?

      In the end, I wish you well. Have a little humility and all should be fine.

    • jackhiller@ymail.com jackhiller Feb 27, 2011 12:36 AM Flag

      You continue to confuse GAAP figure reporting with available cash flow for distribution by ignoring tbe trust investment earnings that do not show in GAAP. The earnings report from Sep showed clearly that the distribution was well covered by available cash flow, plus extra cash was held in reserve. The secondary would not have been supported by the big investmenthouses if they had founfd that distributions were covered by borowing instead of the reported cash flow.

      You have got to be a Short who is trying to scare off Longs.

    • With all due respect, I am using the exact correct numbers. Look at their filed reports.

      Please look at how they define DCF. If accounts receivables go up, they include this in DCF. In other words, they distribute this increased AR before they get it.

      Again, this might be okay, but they have to borrow the money before they collect it. It doesn't appear out of thin air. What if they don't collect it. What happens then?

      With regards to the comments that say this is a good business because people will always die, that is just ridiculous. That does not automatically mean that a cemetery and/ or funeral home is a good business.

    • I encourage new and seasoned investors in the MLP space to review the following MLP primer: http://www.naptp.org/documentlinks/Investor_Relations/WF_MLP_Primer_IV.pdf

      DCF and the payout ratio are extremely important components to value this or any MLP.

      I wish you the best in your investment endeavors, whether that is a Company or a Partnership.

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STON
30.95-0.33(-1.05%)Jul 30 4:02 PMEDT