SNFCA
I've been slowly acquiring a small position in SNFCA in the upper 4's since it's earnings. here is what I like.
1) I think the earnings were one of the best out of the microcaps of the recent quarter, yet nobody cared. I think the tough comp took some of excitement out of this stock (much easier comp in q3) but this quarter was vastly superior to q2 last year if you look under the hood with the quality of these earnings.
2) Stock trades at a steep discount to book value.
3) The mortgage business seems to have turned the quarter and after getting costs under control and where interest rates are I expect even better results from q3.
4) The life insurance business which you say slowed down, I say this quarter seemed like a one off event where they made some bad investments in this unit causing almost a 1.5 million loss versus almost a 500k profit last year, without these investment issues, net profits were actually up in the quarter for this unit. Of course this has to be watched, but my guess is this was a one time event as there losses never were anywhere near there in recent quarters, and plenty of quarter they posted gains. Even if forget a profit we were to assume investments were at 0, this could add another .06-.07 in eps alone in q3. This is why that .20 was so impressive they did this with investment losses that seemed outside the norm. if this revert to historical norms, This could mean the life insurance is gonna bounce back big time in q3.
5) The mortuary Business once again you said they slowed down, I strongly disagree this is the best unit out of the three it is growing well and is extremely profitable, what made the comp look terrible was they sold some assets last year this time that caused a big gain from the sale, which is the reason why q2 was down y/y if you take the sale out everything is fine, here, I expect this business continue to grow.
So all in all we got a rapidly improving mortgage business, a growing mortuary business who was misunderstood this quarter because of a gain on sale of asset in the year ago comp. a insurance unit whose comp wasn't great because of a out of whack almost 1.5 million loss in investments, and they still earned .20 in the quarter, I wouldn't be surprised if q3 is in the .27-.32 range, I may even be proven to be cautious here if the Mortgage unit really take off I could see scenarios of .35+, But just the life insurance unit not having losses in investment and a little more growth from the mortgage business we could easily see a .30 quarter fully taxed. I think SNFCA is the best it has ever looked, I think the mortuaries business despite the headline is as good as it has ever been, the mortgage business with costs under control with any growth could show huge profits, and the life insurance business has a great chance to bounce back from q2 with the investment losses not repeating in future quarters in my opinion (Hopefully). All is just my opinion, and I could always be wrong though.
