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Service Corporation International (SCI)
NYSE:SCI
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Service International
(NYSE:SCI)75Outperform
Positive Factors
Cemetery Sales
The company is confident in growing cemetery pre-need sales due to limited supply, high barriers to entry, and strong cash flows.
Insurance Contracts
Several tailwinds give confidence in the EPS growth at or above 12%, including new insurance contracts and deals completed.
Negative Factors
Operating Cash Flow
Operating cash flow guidance is below consensus, reflecting a cautious outlook.
Service International (SCI) vs. S&P 500 (SPY)
Market Cap
$11.66B
Dividend Yield1.48%
Average Volume (3M)1.35M
Price to Earnings (P/E)22.9
Beta (1Y)0.80
Revenue Growth2.11%
EPS Growth0.05%
CountryUS
Employees24,953
SectorConsumer Cyclical
Sector Strength53
IndustryPersonal Services
Share Statistics
EPS (TTM)3.53
Shares Outstanding144,212,250
10 Day Avg. Volume1,210,958
30 Day Avg. Volume1,348,540
Financial Highlights & Ratios
PEG Ratio453.66
Price to Book (P/B)N/A
Price to Sales (P/S)2.79
Price to Cash Flow (P/CF)11.00
P/FCF Ratio15.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$95.00Price Target Upside17.49% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
Service International Business Overview & Revenue Model
Company DescriptionService Corporation International (SCI) is the largest provider of funeral, cremation, and cemetery services in North America. Headquartered in Houston, Texas, SCI operates a network of funeral homes and cemeteries, offering comprehensive end-of-life services. The company is committed to providing compassionate support and guidance to families during their most difficult times, with a strong focus on customer service and customized memorialization options.
How the Company Makes MoneyService Corporation International generates revenue through several key streams. Primarily, the company earns money by providing funeral services, which include traditional funerals, cremations, and memorial services. Additionally, SCI generates income from the sale of cemetery property like burial plots, mausoleums, and niches for cremation urns. The company also offers pre-need services, allowing customers to arrange and pay for services in advance, which provides a steady stream of deferred revenue. Moreover, SCI benefits from its scale and extensive network, leading to operational efficiencies and cost-saving opportunities. Partnerships with local and national organizations can also enhance service offerings and expand market reach, further contributing to its revenue.
Service International Financial Statement Overview
Summary
Service International displays a solid financial position with steady revenue growth and strong cash flow generation, which supports operational sustainability and potential for future expansion. The balance sheet remains healthy with manageable leverage levels, although profitability margins have experienced slight pressure.Income Statement
Service International has demonstrated solid revenue growth with a TTM (Trailing-Twelve-Months) revenue increase compared to the previous year. The gross profit margin is strong, reflecting efficient cost management. However, there is a slight decline in net profit margin and EBIT margin, indicating increased expenses or competitive pressures. Overall, profitability remains stable with a robust EBITDA margin.82
Very Positive
Balance Sheet
The company's balance sheet shows a moderate debt-to-equity ratio, indicating a balanced approach to leveraging. Stockholders' equity has improved, enhancing the equity ratio and demonstrating increased asset backing. However, the return on equity has seen a decline, suggesting reduced efficiency in generating profits from equity.75
Positive
Cash Flow
Service International has shown strong free cash flow growth, boosting its financial flexibility. The operating cash flow to net income ratio is healthy, indicating effective cash generation relative to net earnings. The free cash flow to net income ratio is also strong, reflecting good conversion of profits into cash flow despite capital expenditures.79
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 4.19B | 4.10B | 4.11B | 4.14B | 3.51B | 3.23B | Gross Profit |
| 1.09B | 1.09B | 1.15B | 1.30B | 976.83M | 760.58M | EBIT |
| 926.44M | 944.25M | 927.32M | 1.19B | 842.77M | 666.61M | EBITDA |
| 1.17B | 1.26B | 1.27B | 1.44B | 1.09B | 876.83M | Net Income Common Stockholders |
| 518.65M | 537.32M | 565.34M | 802.94M | 515.91M | 369.60M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 221.56M | 221.56M | 191.94M | 268.63M | 230.86M | 186.28M | Total Assets |
| 16.36B | 16.36B | 15.07B | 15.69B | 14.52B | 13.68B | Total Debt |
| 4.80B | 4.80B | 4.34B | 3.97B | 3.83B | 3.58B | Net Debt |
| 4.58B | 4.58B | 4.15B | 3.70B | 3.60B | 3.40B | Total Liabilities |
| 14.81B | 14.81B | 13.39B | 13.78B | 12.76B | 11.85B | Stockholders Equity |
| 1.54B | 1.54B | 1.67B | 1.91B | 1.75B | 1.82B |
| Cash Flow | Free Cash Flow | ||||
| 555.80M | 507.25M | 456.02M | 616.95M | 582.14M | 388.80M | Operating Cash Flow |
| 944.91M | 869.04M | 825.73M | 920.61M | 804.35M | 628.75M | Investing Cash Flow |
| -620.95M | -469.39M | -447.88M | -414.93M | -318.37M | -278.51M | Financing Cash Flow |
| -319.64M | -381.14M | -448.00M | -465.62M | -492.78M | -319.09M |
Service International Technical Analysis
Positive
80.86
Price Trends
78.63
Positive
80.66
Positive
77.43
Positive
Market Momentum
0.43
Negative
56.79
Neutral
49.81
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SCI, the sentiment is Positive. The current price of 80.86 is above the 20-day moving average (MA) of 79.02, above the 50-day MA of 78.63, and above the 200-day MA of 77.43, indicating a bullish trend. The MACD of 0.43 indicates Negative momentum. The RSI at 56.79 is Neutral, neither overbought nor oversold. The STOCH value of 49.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SCI.
Service International Risk Analysis
Service International disclosed 25 risk factors in its most recent earnings report. Service International reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Service International Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $11.66B | 22.88 | 32.22% | 1.48% | 2.11% | 0.05% | |
72 Outperform | $10.04B | 22.35 | 24.52% | 0.64% | 11.91% | 28.47% | |
71 Outperform | $98.96M | 16.34 | 4.82% | 3.79% | 7.55% | -20.61% | |
71 Outperform | $1.23B | 43.92 | 5.75% | 2.18% | 9.22% | -45.37% | |
70 Outperform | $603.92M | 18.32 | 17.04% | 1.17% | 8.18% | 13.94% | |
60 Neutral | $743.25M | ― | -13.19% | 4.08% | -4.53% | -252.80% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
SCI
Service International
80.86
6.90
9.33%
CSV
Carriage Services
38.59
12.97
50.62%
EHC
Encompass Health
99.25
24.03
31.95%
MATW
Matthews International
24.60
-4.12
-14.35%
PROV
Provident Financial Holdings
14.79
1.33
9.88%
USPH
US Physical Therapy
80.84
-23.61
-22.60%
Service International Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: 6.41% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call reflected a generally positive outlook with significant growth in earnings per share, revenue, and cash flow, alongside successful capital investments and cemetery revenue growth. However, challenges such as declines in preneed funeral sales production, expected flat or slightly negative funeral volumes, and an anticipated higher tax rate indicate areas of concern.Highlights
Earnings Per Share Growth
Adjusted earnings per share increased from $0.93 in the previous year to $1.06 in the fourth quarter of 2024.
Revenue and Gross Profit Increase
Both funeral and cemetery segments saw increases in revenues, gross profit, and comparable margin percentages, contributing to earnings per share growth.
Cemetery Revenue Growth
Comparable cemetery revenue increased by $20 million or about 4%, with core revenue primarily responsible for the increase.
Strong Cash Flow and Liquidity
Adjusted operating cash flow for the fourth quarter was $268 million, exceeding expectations and resulting in a strong financial position with liquidity totaling about $1.6 billion.
Successful Capital Investments
Invested $140 million into current locations, growth opportunities, and acquisitions in the fourth quarter, with a total of $348 million in maintenance CapEx for the full year.
Lowlights
Preneed Funeral Sales Production Decline
Preneed funeral sales production decreased by $27 million or about 9% over the fourth quarter of 2023, primarily due to the transition to a new preneed insurance provider.
Decrease in Nonfuneral Home Preneed Sales Revenue
SCI Direct nonfuneral home revenue decreased by over $4 million, driven by a $6 million decline in nonfuneral home preneed sales revenue.
Funeral Volume Concerns
There is an expectation of flat to slightly down funeral volume in 2025 compared to 2024, indicating potential challenges in maintaining growth.
Higher Effective Tax Rate Expected
For 2025, the effective tax rate is anticipated to be about 25.5%, some 180 basis points higher than 2024.
Impact of Natural Disasters
Fixed costs increased due to damages incurred at locations impacted by natural disasters during the quarter.
Company Guidance
In the fourth quarter of 2024, Service Corporation International (SCI) reported a significant improvement in their financial performance, with adjusted earnings per share rising to $1.06 from $0.93 in the previous year. This growth was driven by a $0.14 increase in earnings per share from operating income, attributed to a $0.09 contribution from higher revenues, gross profit, and margin percentages in both the funeral and cemetery segments, along with a $0.05 contribution from reduced general and administrative expenses. SCI's funeral segment saw a $5 million increase in total comparable funeral revenues, despite a 4.4% decrease in core funeral services performed, as the core average revenue per service rose by 2.7%. The cemetery segment experienced a $20 million revenue increase, with core revenue growth of $21 million and a 150 basis point improvement in gross profit percentage. Looking ahead to 2025, SCI provided a normalized earnings per share guidance range of $3.70 to $4, forecasting a 5% to 13% growth, with a midpoint of 9%. They anticipate a flat to slightly down funeral volume, with cemetery revenue expected to grow by 2% to 3%.Service International Corporate Events
Dividends
Service International Increases Quarterly Cash Dividend
Positive
Feb 20, 2025
On February 20, 2025, Service Corporation International announced a 6.7% increase in its quarterly cash dividend, raising it from thirty to thirty-two cents per share. This decision, payable on March 31, 2025, reflects the company’s commitment to returning value to shareholders while maintaining financial performance reviews each quarter, indicating potential positive impacts on its financial stability and shareholder relations.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.