Companies: DTY   

Funeral services provider Dignity, recently recommended by Growth Company Investor at 742p, continues to deliver steady, robust growth for investors.

In a Q3 trading update, Dignity, which grew interim pre-tax profits 17% to £21.1m, said sales for the first nine months of 2008 had grown by 9.6% to £130.7m, while operating profits had increased by 10.5% to £40.1m.

Moreover, chief executive Peter Hindley reassured investors that trading was in line with expectations, leaving Dignity on track to meet full-year forecasts – analysts are looking for a rise in pre-tax profits from £30.1m to £33.6m, with earnings set to grow to 37.5p (2007: 34.3p).

Dignity, the operator of more than 500 funeral locations, continues to play a key role in the consolidation of the fragmented and non-cyclical funeral services sector. During the third quarter, the group took over the operation of Rotherham Metropolitan Borough Council’s crematorium and cemeteries, while more recently, it has taken over one privately owned crematorium in Scotland. In addition, Dignity has been announced as ‘preferred partner’ to run Weymouth and Portland Borough Council’s cemetery and crematorium services.

Strongly cash generative, dividend-paying Dignity trades on a prospective p/e of 16.5, which is relatively undemanding given its track record and the fact that the business has yet to see any negative impact from the downturn. Investors that bought on our advice should sit tight.

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Dignity	LSE	£387.89m	611.00p	-1.50p
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