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Dignity (full-year earnings 14 March)
Dignity has begun to report tougher trading conditions, as consumers start to look for lower prices in the funeral sector.
Earnings are forecast to halve during the year, as the firm cuts prices to remain competitive. At 12-times earnings, the shares are much more interesting now than at the 20-times seen in previous years. A dividend of 3% looks interesting, and is well-covered by earnings. However, the net debt of over £500 million does provide some cause for concern. Dignity will have to work hard to regain business and pay down debt, a course that will result in a hit to earnings.
There has been little good news for Dignity, and while the share price has rallied of late, it remains a fraction of the levels seen in mid-2017. The first target is £12, being the top end of the recent gap lower, and then on to £15.79. The first area of support comes in at £7.36, and then on to £5.74p and 484p.
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