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Service Corporation International (SCI)
:SCI
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Service International
(NYSE:SCI)
76Outperform
Positive Factors
Cemetery Sales
Cemetery revenues and margins above expectations, with gross margin +160bps year over year.
Insurance Contracts
The new insurance contract provides offsets given higher commission fees on higher production.
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 Revenues
Funeral revenues missed on lower volumes, with Vols 3% below estimates.
Service International (SCI) vs. S&P 500 (SPY)
Market Cap
$11.11B
Dividend Yield1.58%
Average Volume (3M)1.21M
Price to Earnings (P/E)21.8
Beta (1Y)0.68
Revenue Growth2.11%
EPS Growth0.05%
CountryUS
Employees17,685
SectorConsumer Cyclical
Sector Strength61
IndustryPersonal Products & Services
Share Statistics
EPS (TTM)3.53
Shares Outstanding144,095,780
10 Day Avg. Volume1,207,681
30 Day Avg. Volume1,211,732
Financial Highlights & Ratios
PEG Ratio432.46
Price to Book (P/B)N/A
Price to Sales (P/S)2.69
Price to Cash Flow (P/CF)10.60
P/FCF Ratio14.70
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 Upside23.25% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
Service International Business Overview & Revenue Model
Company DescriptionService Corporation International provides deathcare products and services in the United States and Canada. The company operates through Funeral and Cemetery segments. Its funeral service and cemetery operations comprise funeral service locations, cemeteries, funeral service/cemetery combination locations, crematoria, and other businesses. The company also provides professional services related to funerals and cremations, including the use of funeral facilities and motor vehicles; arranging and directing services; and removal, preparation, embalming, cremation, memorialization, and travel protection, as well as catering services. In addition, it offers funeral merchandise, including burial caskets and related accessories, urns and other cremation receptacles, outer burial containers, flowers, online and video tributes, stationery products, casket and cremation memorialization products, and other ancillary merchandise. Further, the company's cemeteries provide cemetery property interment rights, such as developed lots, lawn crypts, mausoleum spaces, niches, and other cremation memorialization and interment options; and sells cemetery merchandise and services, including memorial markers and bases, outer burial containers, flowers and floral placements, graveside services, merchandise installations, and interments, as well as offers preneed cemetery merchandise and services. Service Corporation International offers its products and services under the Dignity Memorial, Dignity Planning, National Cremation Society, Advantage Funeral and Cremation Services, Funeraria del Angel, Making Everlasting Memories, Neptune Society, and Trident Society brands. As of December 31, 2021, it owned and operated 1,471 funeral service locations; and 488 cemeteries, including 299 funeral service/cemetery combination locations covering 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico. The company was incorporated in 1962 and is headquartered in Houston, Texas.
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
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 | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.19B | 4.10B | 4.11B | 4.14B | 3.51B | Gross Profit |
| 1.09B | 1.09B | 1.15B | 1.30B | 976.83M | EBIT |
| 927.68M | 944.25M | 927.32M | 1.19B | 842.77M | EBITDA |
| 1.26B | 1.26B | 1.27B | 1.44B | 1.09B | Net Income Common Stockholders |
| 518.65M | 537.32M | 565.34M | 802.94M | 515.91M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 218.77M | 221.56M | 191.94M | 268.63M | 230.86M | Total Assets |
| 17.38B | 16.36B | 15.07B | 15.69B | 14.52B | Total Debt |
| 4.92B | 4.80B | 4.34B | 3.97B | 3.83B | Net Debt |
| 4.70B | 4.58B | 4.15B | 3.70B | 3.60B | Total Liabilities |
| 15.70B | 14.81B | 13.39B | 13.78B | 12.76B | Stockholders Equity |
| 1.68B | 1.54B | 1.67B | 1.91B | 1.75B |
| Cash Flow | Free Cash Flow | |||
| 555.80M | 507.25M | 456.02M | 616.95M | 582.14M | Operating Cash Flow |
| 944.91M | 869.04M | 825.73M | 920.61M | 804.35M | 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
Negative
77.08
Price Trends
78.97
Negative
80.72
Negative
78.06
Negative
Market Momentum
0.30
Negative
56.77
Neutral
80.30
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SCI, the sentiment is Negative. The current price of 77.08 is below the 20-day moving average (MA) of 79.58, below the 50-day MA of 78.97, and below the 200-day MA of 78.06, indicating a bearish trend. The MACD of 0.30 indicates Negative momentum. The RSI at 56.77 is Neutral, neither overbought nor oversold. The STOCH value of 80.30 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $11.11B | 21.81 | 32.22% | 1.58% | 2.11% | 0.05% | |
72 Outperform | $9.89B | 21.97 | 24.52% | 0.65% | 11.91% | 28.47% | |
68 Neutral | $588.13M | 17.81 | 17.04% | 1.20% | 6.17% | -2.98% | |
63 Neutral | $1.04B | 37.37 | 5.75% | 2.57% | 11.00% | 37.38% | |
60 Neutral | $93.34M | 15.41 | 4.82% | 4.01% | 7.55% | -20.61% | |
59 Neutral | $11.22B | 10.13 | -1.22% | 3.96% | 1.32% | -18.57% | |
47 Neutral | $618.75M | ― | -13.19% | 4.90% | -7.12% | -284.19% |
* Consumer Cyclical Sector Average
Performance Comparison
SCI
Service International
77.08
5.79
8.12%
CSV
Carriage Services
37.51
12.36
49.15%
EHC
Encompass Health
97.96
16.23
19.86%
MATW
Matthews International
19.98
-7.08
-26.16%
PROV
Provident Financial Holdings
13.95
0.92
7.06%
USPH
US Physical Therapy
67.10
-37.80
-36.03%
Service International Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: 1.85% | 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.