Service International’s Strong Financial Performance and Growth Justify Buy Rating

Service International (SCI – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Joanna Gajuk from Bank of America Securities reiterated a Buy rating on the stock and has a $98.00 price target.

Joanna Gajuk’s rating is based on several positive indicators for Service International’s financial performance. The company experienced higher funeral volumes, which helped improve funeral margins despite weaker pre-need cemetery sales. This increase in volume led to total revenues and EBITDA exceeding expectations, with funeral revenues alone surpassing consensus estimates by 5%. Additionally, same-store revenues showed growth, marking the first positive change since the third quarter of 2021.
Furthermore, Service International’s cash flow demonstrated strong growth, contributing to a solid free cash flow yield of 5%. This financial strength, along with potential benefits from capital deployment, supports the Buy rating. Although there were some challenges in cemetery revenues and margins, the overall financial outlook remains positive, with the company reaffirming its full-year EPS guidance. These factors combined justify the Buy recommendation for Service International’s stock.