Funeral services company Carriage Services (NYSE:CSV) reported results ahead of analysts' expectations in Q1 CY2024, with revenue up 8.4% year on year to $103.5 million. It made a GAAP profit of $0.45 per share, down from its profit of $0.57 per share in the same quarter last year.

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Carlos Quezada, Vice Chairman and CEO, stated, “We are pleased to announce another solid performance in the first quarter of 2024, which reflects our consistent focus on executing our five-year strategic objectives. Our preneed cemetery sales team achieved a remarkable 38.4% year-over-year increase in preneed sales, highlighting the continued effectiveness of our cemetery sales growth plan. This solid cemetery performance contributed significantly to an increase in total revenue of 8.4% compared to the previous year.

Established in 1991, Carriage Services (NYSE:CSV) is a provider of funeral and cemetery services in the United States.

Specialized Consumer Services

Some consumer discretionary companies don’t fall neatly into a category because their products or services are unique. Although their offerings may be niche, these companies have often found more efficient or technology-enabled ways of doing or selling something that has existed for a while. Technology can be a double-edged sword, though, as it may lower the barriers to entry for new competitors and allow them to do serve customers better.

Sales Growth

Reviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Carriage Services's annualized revenue growth rate of 7.9% over the last five years was weak for a consumer discretionary business. Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. Carriage Services's recent history shows the business has slowed as its annualized revenue growth of 1.7% over the last two years is below its five-year trend.

This quarter, Carriage Services reported solid year-on-year revenue growth of 8.4%, and its $103.5 million of revenue outperformed Wall Street's estimates by 4.8%. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months, a deceleration from this quarter.

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Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Over the last two years, Carriage Services has shown solid cash profitability, giving it the flexibility to reinvest or return capital to investors. The company's free cash flow margin has averaged 15.1%, above the broader consumer discretionary sector.

Carriage Services's free cash flow came in at $20.9 million in Q1, equivalent to a 20.2% margin and down 13% year on year.

Key Takeaways from Carriage Services's Q1 Results

We enjoyed seeing Carriage Services exceed analysts' revenue and adjusted EBITDA expectations this quarter. The stock is up 3% after reporting and currently trades at $26.6 per share.

So should you invest in Carriage Services right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.