CSV

Carriage runs a defensive, demand-inelastic business: 155 funeral homes and 28 cemeteries, ~65% funeral / ~35% cemetery revenue, with a large fixed-cost base and pricing leverage on at-need contracts. The quality markers are real — FY2025 operating income rose +19.4% to $97.7M (23.4% operating margin), ROE is a healthy 20.2%, and operating cash flow of $60.7M comfortably covers $20.6M capex and the $7.03M dividend. At $39.02 the stock trades at 12.0x EPS and 1.5x sales, which is undemanding for a stable, recession-resistant compounder. The MD&A itself notes the industry 'has been largely resilient to similar adverse economic and market environments' and that inflation has not materially impacted the business to date.

The catch is earnings quality and growth. Net income jumped +56.3% to $51.5M and diluted EPS +54.8% to $3.25, yet revenue grew only +3.3% and gross profit only +2.3%. That gap between modest operating growth and an outsized bottom-line surge is a flag: FY2025 saw 13 funeral homes and 4 cemeteries divested (the footprint shrank from 171 homes in 2023 to 155), and prior years clustered around $33M net income (FY2022 $41.4M, FY2023 $33.4M, FY2024 $33.0M). A meaningful slice of the 2025 jump is likely non-recurring gains on sale rather than organic earnings power — normalize toward the low-$40Ms and the P/E is closer to ~15x, i.e. fair rather than cheap. Revenue has crept from $376M (2021) to $417M (2025), a low-single-digit grower structurally pressured by rising cremation mix, where average revenue runs ~one-third of a traditional burial.