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Service Corporation International (SCI)
NYSE:SCI

Service International (SCI) AI Stock Analysis

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Service International

(NYSE:SCI)

75Outperform
Service International's overall stock score reflects a balanced view of its solid financial performance, stable technical indicators, and fair valuation. The company's positive earnings call and recent dividend increase further support its financial health and shareholder value. Key strengths include strong cash flow and successful capital investments, while challenges such as flat funeral volumes and competitive pressures on margins are noted.
Positive Factors
Cemetery Sales
Pre-need Cemetery sales showed notable growth, outperforming expectations despite challenging comparisons.
Insurance Contract
The new insurance contract provides offsets given higher commission fees on higher production.
Rose Hills Recovery
Visitations at Rose Hills grew much faster than average in December, pointing to a recovery after a slowdown.
Negative Factors
Foot Traffic
Foot traffic declined in the other big SCI's states: -5% in Texas, -11% in Arizona, and -8% in Illinois.
Funeral Volumes
Funeral volumes remain volatile and were worse than expected, partly due to normalization after a period of excess deaths.
Visitations
The strong March was not enough to offset weak Jan-Feb, and for the full quarter Q1, visits decreased -5% y/y.

Service International (SCI) vs. S&P 500 (SPY)

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. While profitability margins have seen slight pressure, the balance sheet remains healthy with manageable leverage levels.
Income Statement
82
Very Positive
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.
Balance Sheet
75
Positive
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.
Cash Flow
79
Positive
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.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
4.19B4.10B4.11B4.14B3.51B
Gross Profit
1.09B1.09B1.15B1.30B976.83M
EBIT
927.68M944.25M927.32M1.19B842.77M
EBITDA
1.26B1.26B1.27B1.44B1.09B
Net Income Common Stockholders
518.65M537.32M565.34M802.94M515.91M
Balance SheetCash, Cash Equivalents and Short-Term Investments
218.77M221.56M191.94M268.63M230.86M
Total Assets
17.38B16.36B15.07B15.69B14.52B
Total Debt
4.92B4.80B4.34B3.97B3.83B
Net Debt
4.70B4.58B4.15B3.70B3.60B
Total Liabilities
15.70B14.81B13.39B13.78B12.76B
Stockholders Equity
1.68B1.54B1.67B1.91B1.75B
Cash FlowFree Cash Flow
555.80M507.25M456.02M616.95M582.14M
Operating Cash Flow
944.91M869.04M825.73M920.61M804.35M
Investing Cash Flow
-620.95M-469.39M-447.88M-414.93M-318.37M
Financing Cash Flow
-319.64M-381.14M-448.00M-465.62M-492.78M

Service International Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price78.42
Price Trends
50DMA
78.86
Negative
100DMA
79.54
Negative
200DMA
78.53
Negative
Market Momentum
MACD
-0.05
Negative
RSI
50.26
Neutral
STOCH
64.45
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SCI, the sentiment is Neutral. The current price of 78.42 is above the 20-day moving average (MA) of 78.14, below the 50-day MA of 78.86, and below the 200-day MA of 78.53, indicating a neutral trend. The MACD of -0.05 indicates Negative momentum. The RSI at 50.26 is Neutral, neither overbought nor oversold. The STOCH value of 64.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
SCSCI
75
Outperform
$11.30B22.1932.22%1.55%2.11%0.05%
EHEHC
70
Outperform
$11.45B23.4225.35%0.56%11.21%30.49%
69
Neutral
$97.72M16.184.82%3.82%7.55%-20.61%
CSCSV
69
Neutral
$620.59M18.7917.04%1.14%6.17%-2.98%
65
Neutral
$1.07B38.325.75%2.51%11.00%37.38%
60
Neutral
$6.85B11.713.15%4.16%2.38%-21.88%
49
Neutral
$636.10M-13.19%4.77%-7.12%-284.19%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SCI
Service International
78.42
6.63
9.24%
CSV
Carriage Services
39.58
13.84
53.77%
EHC
Encompass Health
113.37
30.32
36.51%
MATW
Matthews International
20.54
-6.05
-22.75%
PROV
Provident Financial Holdings
14.60
2.70
22.69%
USPH
US Physical Therapy
70.53
-29.40
-29.42%

Service International Earnings Call Summary

Earnings Call Date:Feb 12, 2025
(Q4-2024)
|
% Change Since: 3.62%|
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.
Q4-2024 Updates
Positive Updates
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.
Negative Updates
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.