Why the Propel Funeral Partners share price is climbing today

Propel Funeral Partners Ltd (ASX:PFP) is a rival to Invocare Limited (ASX:IVC).

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The Propel Funeral Partners Ltd (ASX: PFP) share price is up 1.6% to $2.55 today after the funeral parlour operator and aggregator told investors that it expects first half adjusted earnings to be roughly in line with the $6.27 million delivered in the prior corresponding period.

However, investors should note the adjusted profit amount backs out 'transaction costs', foreign exchange impacts and "other non operating income and expenses".

As such investors should wait for the February 25 2019 interim result to see properly how the group has endured challenging conditions that have seen lower-than-expected deaths over the period.

This phenomenon has also dragged down the Invocare Limited (ASX: IVC) share price, which is a larger rival that operates the White Lady funerals parlours among others.

Propel expects to pay out 75%-85% of its net profit in dividends and maintains a moderately strong balance sheet with $11 million net cash in hand, which is notable as its growth strategy depends partly on acquisitions.

It's also aiming to grow revenue per funeral on a like-for-like basis and flagged that it's on track to deliver 2%-4% growth for the current half-year period.

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has recommended InvoCare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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