StoneMor Partners Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and StoneMor Partners (NYSE: STON  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

StoneMor is a master limited partnership, but unlike most MLPs, it's not in the energy or natural resources industries. Rather, it's a funeral and death-services company, but its structure gives it some of the same tax benefits that more traditional MLPs enjoy. Let's take an early look at what's been happening with StoneMor Partners over the past quarter and what we're likely to see in its quarterly report on Friday.

Stats on StoneMor Partners

 

 

Analyst EPS Estimate

($0.06)

Year-Ago EPS

($0.16)

Revenue Estimate

$62.3 million

Change From Year-Ago Revenue

6.1%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Will StoneMor Partners make investors some money this quarter?
Analysts have gotten a tiny bit more optimistic about StoneMor over the past few months, raising their consensus earnings call for the just-ended quarter by a penny per share and boosting full-year 2013 projections by $0.02 per share. But even though the company is still expected to lose money throughout 2013, the MLP's unit price has risen by more than 20% since early December.

StoneMor owns and operates cemeteries and funeral homes. Although that may not seem like a very lively business, StoneMor actually faces quite a bit of competition, and lately those competitors have seen a lot faster growth and better earnings than the MLP. In particular, Carriage Services'  (NYSE: CSV  ) share price more than doubled since October as it beat earnings estimates two weeks ago and announced positive guidance. Rivals Matthews International (NASDAQ: MATW  ) and Stewart Enterprises (NASDAQ: STEI  ) have also found ways to earn positive income from their death-services operations, as both have tapped into the demographic trends of an aging population to offer both immediate and pre-need arrangements.

Yet StoneMor's earnings can be somewhat misleading, due to the vagaries of accounting rules that Fool analyst Alex Pape has argued completely distort the reality of the business. With flexibility to take money out of pre-need burial trusts by delivering what it sold, the company has a lot of control over what its financial statements look like, making quarterly results difficult to interpret. What investors can't argue with, though, is the 9% yield the MLP current pays in dividends.

In its quarterly report, look for StoneMor to give guidance on how it's doing at integrating its ongoing series of acquisitions. With so many small players in the industry, consolidation is the obvious path to growth and could make a big difference in how StoneMor compares to its peers.

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