SCI - Service Corporation International: The Long-Term Value Accretion Strategy
2024-04-30 20:34:59 ET
Summary
- Service Corp. International is on the back end of the post-pandemic excess death increase and is reaching a more normalized growth rate.
- SCI anticipates a healthy 2-5% same-store-sales growth range for eFY24 as the firm adjusts inventory to better cater to the changing market.
- Revenue per funeral continues to increase year over year as higher tier individuals seek to use SCI's more premium funeral service offerings.
Service Corp. International ( SCI ) is reaching a more normalized state of growth in the post-pandemic era. Topline growth is turning to the final innings of exceptional growth through excess deaths as a result of medical practices resulting from the 2020 pandemic, and should not be expected to grow at those high-single-digit to mid-double-digit rates experienced in 2020 & 2021. At a broader scale, growth has reached a more normalized state if following 2019 growth figures. Management anticipates a healthy 2-5% same-store-sales growth range for eFY24 as the firm makes the necessary changes to inventory to cater to the growing demand for cremation and other funeral-related services. I believe this normalized growth through natural occurrences and M&A paired with management’s disciplined return of capital approach makes SCI a viable investment for an investor seeking slow and steady growth with some yield. I rate SCI with a BUY recommendation and a price target of $76.30/share at 12.43x eFY25 EV/EBITDA....
Service Corporation International: The Long-Term Value Accretion Strategy