On Tuesday, StoneMor Partners (NYSE: STON ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
StoneMor is a player in the funeral and death-services business, from which it has produced substantial returns for investors, largely in the form of dividends. But should investors be worried about the company's ongoing losses? Let's take an early look at what's been happening with StoneMor Partners over the past quarter and what we're likely to see in its quarterly report.
Stats on StoneMor Partners
| Analyst EPS Estimate | ($0.04) |
| Year-Ago EPS | $0.10 |
| Revenue Estimate | $63.59 million |
| Change From Year-Ago Revenue | 6.7% |
| Earnings Beats in Past 4 Quarters | 2 |
Source: Yahoo! Finance.
Can StoneMor Partners see its earnings stay alive and well?
Analysts have cut back on their profit estimates for StoneMor, quadrupling their loss estimates for the first quarter and widening their loss consensus by $0.03 per share for the full 2013 and 2014 years. The stock, though, has done well, rising 12% since late January.
The first thing to realize about StoneMor is that arcane and flexible accounting rules make it important to dig beneath its GAAP earnings. Growth throughout the industry has been substantial, as up-and-coming Carriage Services (NYSE: CSV ) continued to stay on pace for double-digit sales growth as it rapidly expands its reach. Even well-established player Matthews International (NASDAQ: MATW ) managed to grow revenue by nearly 14% in the quarter that ended in March, although its earnings fell slightly from the year-ago quarter. Still, StoneMor's sales haven't been able to rise as quickly as its peers, with its previous report including just a 6% gain in revenue.
But StoneMor has made some key progress during the first quarter. Back in March, the company offered 1.6 million partnership units to investors and underwriters, pricing the offering at $25.35 and potential raising about $38 million to pay down its credit facility.
More vital news came last month, when the IRS affirmed StoneMor's eligibility to remain a publicly traded partnership. With the company relying on its partnership status to avoid double taxation at the corporate level, StoneMor investors have to praise the decision given that it should ensure the continued substantial payouts that the partnership makes to its unitholders.
In StoneMor's quarterly report, watch closely for comments that the company makes about the state of competition within the death-services industry. Given the way that StoneMor has been able to sustain its share price while still distributing huge dividends to investors, rivals will be fiercely interested in grabbing up as much of the lucrative business as they can, and StoneMor needs to be prepared to defend its turf and make smart strategic moves of its own to compete.
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