Dignity (LSE: DTY) releases another solid set of results.
Few companies can boast such a steady track record as Dignity (LSE: DTY), the UK's only listed provider of funeral services.
Today, Dignity released half-year figures and they were pretty impressive across the board. Turnover rose 8% to £116.5m and profit before tax increased 11% to £27.5m, keeping the company's pre-tax profit margins at over 20%.
Cash flow was encouraging as well, with over £40m of fresh funds generated from operations. This allowed Dignity to increase its interim dividend again, this time by 10% to 5.36p.
The company now has over 600 locations, having acquired eight new ones and opened nine satellite ones so far this year. Dignity reckons its market share of funerals is between 11% and 12%, so it still sees plenty of room to grow, due to the fragmented nature of the market. It also added that "client satisfaction remains high" -- I'm assuming they are talking about the families of their clients here...
The steady nature of this business means that management have always carried a relatively high level of debt. Net debt is currently just over £300m, which might put off more cautious investors.
The shares rose 1% to 853p today, as there was little in the announcement to either worry or delight investors. The shares have more than trebled since joining the stock market in April 2004. At the current share price, Dignity is valued at £470m and trades on a forward price-to-earnings ratio of 14. The prospective yield is a shade under 2%.
Dignity is a classic example of an 'under the radar' business that can potentially offer investors superb returns over the long haul. For more great examples of spotting shares like this, make sure you get "10 Steps To Making A Million In The Market". This free guide from The Motley Fool is available to download now.
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> Stuart does not own shares in Dignity.