Company Description

When the economy struggles, businesses with less elastic demand tend to perform relatively well. That's definitely the case with StoneMor Partners, an operator of Cemeteries in the United States with a market cap of $400 million.

StoneMor's recent success was on full display on Nov 9 with solid Q3 results that came in well ahead of expectations.

Third-Quarter Results

Revenue for the period was up 12% from last year to $52 million. Earnings also looked good, coming in at 49 cents, sharply diverging from the Zacks Consensus Estimate calling for a loss of 15 cents.

As a Limited Partnership, one of the key performance metrics for StoneMor is cash distributions, where the company raised its quarterly distribution to 56.5 cents from 55.5 cents last year.

Capital Restructure

With the company reorganizing its capital structure, its balance sheet was also on the upswing, with cash and equivalents up $3.5 million from last year to $18 million. Its total debt load of $206 million is up $23 million from last year.

Estimates

We saw some decent movement in estimates off the good quarter, with the current year adding 14 cents to $1.63.

Valuation

But in spite of the recent gains, shares of STON still look reasonably priced, trading with a forward P/E of 17.75X.

2-Year Chart

On the chart, shares started jumping in early summer before recently hitting a new multi-year high above $30 on the good quarter. But in spite of the gains, the stochastic below the chart is signaling that shares are trading safely away from over-bought territory. Look for support from the trend line on any weakness, take a look below.