Park Lawn (TSX: PLC) is a Toronto-based company that owns and operates cemeteries, crematoriums, and funeral homes in Canada and the United States. Today, I want to discuss why this is my top TSX growth stock to snatch up for April 2023. Let’s jump in.
How has this growth stock performed over the past year?
Shares of this TSX growth stock have climbed 5.9% in 2023 as of close on March 22. However, this growth stock is still down 18% in the year-over-year period. Readers can play with the interactive price chart below and see the similarity between now and the COVID-19 market pullback for Park Lawn. This looks like a terrific buy-the-dip opportunity for a stock that offers exposure to a very promising sector.
Here’s why I’m excited about Park Lawn’s long-term potential
Death care involves providing products or services for the burial or cremation of the dead. Morbid as it may be, the aging population in Canada and across the developed world will lead to strong growth for this industry. That should pique investor interest in the first half of this decade.
ResearchAndMarkets recently estimated that the global deathcare services market was valued at US$118 billion in 2022. The report projects that this market will reach US$189 billion by 2030. That would represent a compound annual growth rate (CAGR) of 6.1% over the forecast period.
Should investors be pleased with its recent results?
This company unveiled its fourth-quarter and full-year fiscal 2022 earnings on March 3, 2023. In the fourth quarter (Q4) of 2022, Park Lawn delivered revenue growth of 9.1% to $86.1 million. Meanwhile, it posted adjusted net earnings of $8.2 million, or $0.239 per diluted share — down marginally from the previous year. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. The measure aims to give a more complete picture of a company’s profitability. Park Lawn posted adjusted EBITDA of $19.7 million in the Q4 fiscal 2022 — down marginally from the previous year.
For the full year, Park Lawn saw revenues rise to $326 million compared to $291 million in fiscal 2021. Revenue growth was powered by the company’s recent acquisitions. Meanwhile, it reported adjusted EBITDA of $74.9 million.
Park Lawn’s strong liquidity has allowed the company to pursue an aggressive acquisition strategy in this space. It completed acquisitions of Ertel Funeral Home & Crematory, Brown’s Cremation & Funeral Service, Taylor Funeral Home, and a handful of others that will bolster Park Lawn’s revenues going forward. The company is set to complete the assets of Carson-Speaks Chapel in Independence, Missouri in early April 2023.
Overall, Park Lawn was able to deliver on “aspirational” growth target for fiscal 2022. It put together a strong year, despite facing a decline in activity in the post-pandemic era.
How does this growth stock look in late March?
Shares of this TSX growth stock currently possess a price-to-earnings ratio of 28. That puts this stock in favourable value territory compared to its industry peers. Park Lawn offers a quarterly dividend of $0.114 per share. That represents a modest 1.6% yield.
