Security National Financial Cor (NASDAQ:SNFCA)

Alert Sent to Members 8/30/2012

SNFCA: The stock operates in mundane industries, with three segments consisting of life insurance, cemetery and mortuary services and mortgage loans.  At first glance, it seems like an odd business mix, but all three areas are somewhat related in theory by being able to generate predictable cash flows. The current housing recovery will likely continue to benefit the mortgage business.  The company has reported four straight quarters of strong EPS growth and 3 straight quarters of strong revenue growth, but the second quarter 2012 it was particularly strong. The stock has risen sharply since it announced strong second quarter 2012 results on 8/15/2012. The company reported second quarter 2012 EPS of $0.36 vs. $0.02 in the prior year quarter.  The challenge is that the company has a history of stringing a few good quarters together only to fall back to unexciting levels.  We need to interview management to see if they may be entering a near term consistent growth cycle.

On 11/23/2012 we alerted our members:

After releasing its third quarter 2012 results via 10-Q on 11/14/2012, the company released its third quarter 2012 results in a press release the following day.  We have since added to our position. 

On 1/22/2013 we alerted our members:

We closed out our position in SNFCA at around $11.00 or 101% higher from when we first coded SNFCA as a GBR.  We will leave SNFCA on the GeoBargain on the radar list and digest the company’s current situation after the 2012 fourth quarter release.

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First Quarter 2013 Results

• Revenues for the first quarter 2013 were $54.8 vs $47.3
• The net gain per common share was $.19 for the three months ended March 31, 2013, compared to a net gain of $.17 per share for the prior year as adjusted for the effect of annual stock dividends.
• Book value per common share was $7.44 as of March 31, 2013, compared to $7.36 as of December 31, 2012.

Scott Quist, Chairman of the Board, President and Chief Executive Officer of the Company, said, “We are pleased with the first quarter results of our company. This quarter represents our ninth consecutive quarter-over-prior-year-quarter improvement in net income and is the second best first quarter in our company’s experience. In addition, in this quarter we also passed the $600,000,000 mark in total assets, which is a tremendous milestone. Going to specific business segments, our life insurance segment continues to give excellent operational results even though the earnings were essentially flat. Due to the Mothe Life Reinsurance acquisition last December and several investments paying off, our cash balances have increased to nearly $80,000,000, which as we invest will improve earnings significantly. At present, our idle cash represents a drag on profitability. Our Death Care segment did experience weakness with a 30% decrease in operational income due to lower case counts and lower pre-need sales for the quarter. Our mortgage segment had a 30% improvement in volume which demonstrates the ongoing advantage of our purchase mortgage emphasis as we continued to increase market share. That 30% volume improvement translated into a nearly 80% profitability improvement as we achieved greater operational leverage.”