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Morningstar, Stewart Enterprises point to Funeral industry Decline|yourfuneralguy

3 Jun

The Second Largest Funeral Corporation in the United States has received a lower credit rating from Morningstar. Stewart Enterprises International STEI, like many corporations simply has too much debt for a dying death care and Funeral Industry.

The rise of cremation written extensively about here seems to be a major cause of this situation. This is along with the indiscretions and instability of funeral preneed are making stable funeral industry revenue difficult.

Secular trends limit opportunities for growth in the death-care industry. First, medical advances are extending life spans. As a result, the Census Bureau estimates that the number of deaths will increase just 1% annually.

Further, cremation has become increasingly popular, with cremation rates rising from 32% in 2000 to 42% today. While death-care companies do generate revenue from cremations, it is much lower than traditional interment. As a result of these factors, we foresee very limited growth for the death-care industry and doubt that Stewart will be able to buck this trend.


Morningstar is initiating credit coverage of Stewart Enterprises STEI with an issuer rating of BB. We think a combination of high leverage, negative long-term secular trends, and investment risk makes the firm’s debt a dicey proposition.


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