The Propel Funeral Partners Ltd (ASX: PFP) share price is climbing this morning after the company delivered a trading update and provided FY20 guidance.

At the time of writing, Propel Funeral shares are up 4.51% to $3.01, reducing the company’s year-to-date share price loss to 11.47%.

What did Propel Funeral announce?

As previously disclosed, COVID-19 restrictions in Australia and New Zealand affected Propel’s ability to offer a full range of services to its clients.

As a result, the company’s comparable average revenue per user (ARPU) in the month of April fell by approximately 10% on the prior corresponding period.

However, the easing of funeral attendee limits in both countries contributed to an ~8% increase in ARPU in May compared to the previous month.

Propel expects ARPU to continue to increase as attendance limits at funeral services are progressively eased in Australia. Funeral attendance limits have now been increased to at least 50 mourners in most Australian states. Meanwhile, limits have been removed altogether across the pond in New Zealand.

As for funeral numbers, Propel’s total funeral volumes were approximately 1% higher in May compared to April. Additionally, the company expects to exceed 13,000 funerals in FY20, up from 11,304 in FY19. This includes part contribution from the acquisitions of Gregson & Weight and Grahams Funeral Services which were completed in November 2019.

In terms of cost-cutting, Propel’s previous trading updates in late March and early May detailed a number of strategies intended to mitigate the potential financial impacts of COVID-19. These measures included the deferral of non-essential capital expenditure, managing staff costs, and raising its liquidity position. Accordingly, at the end of April, Propel had $49 million cash on its books compared to just $6.7 million as at 31 December 2019. 

The company also revealed this morning that some of its businesses have received government subsidies.

FY20 guidance

Along with the trading update, Propel also shed some light on FY20 guidance this morning.

Stating it is on track for another record year, Propel quantified its expectations by providing revenue guidance of approximately $110 million. This compares to $95.1 million revenue achieved in FY19.

The company also provided guidance for earnings before interest, tax, depreciation and amortisation (EBITDA). It is expecting full-year operating EBITDA of approximately $32 million, up from $23.8 million in FY19.

Propel is set to release its FY20 full-year results in late August 2020. In the meantime, the company stated it will continue to monitor the impacts of COVID-19 on its teams, trading and suppliers.

More reading

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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Propel Funeral Partners Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Transurban Group (ASX: TCL) share price slumped 3.34% lower last week, but is the Aussie infrastructure group a secret buy?

What does Transurban actually do?

Transurban is entrenched inside the ASX 50 with a market capitalisation of $38.8 billion. But despite its size, the Aussie infrastructure giant isn’t talked about nearly as much as some of its ASX 200 peers.

Transurban operates 18 roads across Australia and North America. It also has seven major projects scheduled for completion over the next five years. I think this is one of the key reasons it could be a secret buy right now.

The Transurban share price is down 4.43% for the year. That means it’s still outperforming the S&P/ASX 200 Index (ASX: XJO) which has slumped 12.92% in 2020.

I like the company’s diversified earnings which are spread across Australia, Canada and the United States. This provides some operational diversity across each country as well as different currency exposure.

I think given the uncertainty right now, this could be a real advantage. Especially if restrictions continue to ease across the globe.

More people out and about is good for toll road operators. More traffic means more earnings and, most likely, a higher share price. Particularly since many people may be unwilling to use public transport due to fears surrounding coronavirus so are more reliant on their cars. 

The Transurban share price has still fallen lower this year despite what I see as some strong potential tailwinds.

Foolish takeaway

While some other ASX 200 shares have been in the spotlight, it feels to me like Transurban is being largely ignored.

That could mean the Aussie group is a secret bargain. Broad currency exposure, diversified operations and more potential traffic in the next 12 to 18 months seem like big positives.

No one knows whether the Transurban share price is set to rocket higher. However, I think the Aussie company could be a secret bargain ahead of its August earnings result.

More reading

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It has been a disappointing year for the Jumbo Interactive (ASX: JIN) share price.

The online lottery ticket seller and operator of the Oz Lotteries website has seen its shares fall ~25% since the start of 2020.

This poor form has culminated in the company being dumped out of the S&P/ASX 200 Index (ASX: XJO) at the next rebalance on 22 June.

Why is the Jumbo share price down 25%?

Investors have been selling Jumbo’s shares this year for a couple of reasons.

The first is its investment in growth opportunities, which is expected to temporarily soften its margins.

This was evident in its first half result when Jumbo delivered a 23% increase in revenue but a 14% lift in net profit after tax. Quite a contrast to previous years where its profit growth has thoroughly outpaced its revenue growth.

What else is weighing on its shares?

The other potential reason for its share price weakness is Tabcorp Holdings Limited (ASX: TAH) reporting quicker growth in its digital lottery ticket sales.

In the first half, the gambling company reported a 39.8% increase on the prior corresponding period. This compares to a 25% lift in transaction value by Jumbo during the half.

This has sparked fears that Tabcorp will be less reliant on Jumbo to sell its tickets in the future and could be in a stronger negotiating position when Jumbo’s reseller contract ends in 2022. The worst-case scenario would be Tabcorp showing Jumbo the door completely.

Though, it is worth noting that Tabcorp is a substantial shareholder in Jumbo and the two parties have worked together successfully for years. I feel this means it is unlikely to do anything that would impact the value of its shareholding.

In addition to this, with Jumbo expanding internationally, in the coming years it will be less reliant on the Australia market. In fact, it is thanks partly to its expansion plans that Jumbo is aiming to generate $1 billion in global ticket sales annually through its platform by FY 2022. This will be triple what it achieved in FY 2019.

Should you invest?

I’m optimistic that Jumbo and Tabcorp will extend their reseller agreement in 2022.

However, until this happens, the uncertainty is likely to weigh heavily on the company’s shares. This could mean they continue to underperform during the near term until things become clearer.

Nevertheless, I still believe Jumbo could be a great long term investment option for patient investors due to its sizeable global market opportunity.

Incidentally, this morning Jumbo requested a trading halt, pending the release of an announcement in relation to its reseller operations in Western Australia. No details have been released as of yet, but this could potentially shed some light on its future. I would suggest investors keep a close eye out for that announcement.

More reading

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• The Sezzle and Pointsbet share prices have hit new, all time highs. Time to invest?
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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