Service Corporation International
SCI
$76.73
-1.04%
Service Corporation International (SCI) is the largest provider of funeral and cemetery services and products in North America, operating within the personal services segment of the Consumer Cyclical sector. The company is a dominant market leader and consolidator in the fragmented deathcare industry, operating a vast network of funeral homes and cemeteries throughout the United States and Canada. The current investor narrative centers on the company's defensive characteristics and cash-generative business model, which provide stability during economic uncertainty, as evidenced by its consistent quarterly dividend declarations; however, the stock is also grappling with investor sentiment focused on modest organic growth prospects and its significant leverage, which introduces financial risk in a higher interest rate environment.…
SCI
Service Corporation International
$76.73
Related headlines
Investment Opinion: Should I buy SCI Today?
Rating: Hold. The core thesis is that SCI is a high-quality, cash-generative business trapped in a low-growth phase and burdened by leverage, making it fairly valued at current levels with limited near-term catalysts for outperformance.
Supporting this view are four key data points: 1) The stock trades at a forward P/E of 17.07x, a discount to its trailing multiple but still at a premium to many defensive peers, 2) Revenue growth is anemic at 1.69% YoY, offering no growth premium justification, 3) Profitability remains strong with a 33.12% ROE, but net margins showed sequential pressure, declining to 14.34% in Q4, and 4) The substantial 5.4% FCF yield and consistent dividend provide a defensive floor, but this is counterbalanced by a high debt-to-equity ratio of 3.14.
The two biggest risks invalidating a neutral stance are a further deceleration in revenue growth below 1% and a rise in interest expenses pressuring net income. This Hold would upgrade to a Buy if the forward P/E compressed below 15x (implying a price near $76) alongside evidence of sustained margin expansion or debt reduction. It would downgrade to a Sell if the stock breaks below its 52-week low of $74.99 on deteriorating fundamentals. Relative to its history and defensive peers, SCI is fairly valued to slightly overvalued, as the market is paying a premium for stability and cash flow that is not currently being rewarded with price appreciation.
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SCI 12-Month Price Forecast
SCI presents a dichotomy: its underlying business is defensive and throws off substantial cash, but the stock is being penalized for high leverage and a lack of growth. The neutral stance reflects this balance; the cash flow provides a floor, but the valuation premium and weak momentum cap near-term upside. The stance would upgrade to Bullish on a conclusive break above the 52-week high of $88.67, signaling a new uptrend and investor re-engagement. It would downgrade to Bearish on a sustained break below $74.99, which would confirm the bear case of multiple compression and likely lead to a test of lower valuation supports.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Service Corporation International's 12-month outlook, with a consensus price target around $99.75 and implied upside of +30.0% versus the current price.
Average Target
$99.75
1 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
1
covering this stock
Price Range
$61 - $100
Analyst target range
Analyst coverage for SCI appears limited, with the provided data indicating only one analyst providing estimates for revenue and EPS, which suggests insufficient breadth for a robust consensus view. The single analyst's revenue estimate for the period is approximately $4.77 billion, with a tight EPS estimate range of $5.03 to $5.11, averaging $5.07. Based on the institutional ratings data, the sentiment among the few covering firms is consistently bullish, with recent actions from UBS (Buy), Oppenheimer (Outperform), and Raymond James (Outperform) all maintaining positive ratings throughout 2024 and 2025. The lack of a published average price target in the data and the minimal number of analysts point to limited institutional coverage, which is common for this niche, defensive industry. This limited coverage can lead to higher volatility and less efficient price discovery, as the stock may be more influenced by its own fundamentals and macro trends than by shifting analyst sentiment; the stable, 'Buy' or 'Outperform' ratings from the few covering firms reflect a view of the company as a reliable, cash-generative operator within its sector.
Bulls vs Bears: SCI Investment Factors
The evidence currently tilts bearish, primarily due to the stock's severe technical breakdown and lack of fundamental growth catalysts to justify its valuation premium. The bull case rests on SCI's defensive cash flows and high profitability, but these strengths are being overshadowed by persistent selling pressure and investor skepticism about its growth prospects. The single most important tension in the investment debate is whether the company's robust free cash flow generation (5.4% FCF yield) and defensive nature can outweigh the significant headwinds of high leverage, stagnant revenue, and a valuation that appears rich for its growth profile. The resolution of this tension—specifically, whether earnings can grow sufficiently to validate the forward P/E or if leverage becomes a more pressing concern—will determine the stock's direction.
Bullish
- Robust Free Cash Flow Generation: SCI generates exceptionally strong free cash flow, with TTM FCF of $599.2 million, yielding approximately 5.4% relative to its market cap. This cash-generative business model supports a consistent dividend with a 33.8% payout ratio and share buybacks, providing a defensive floor for the stock.
- Defensive Business Model in Downtrend: The company operates in the essential deathcare industry, which is non-discretionary and provides stability during economic uncertainty. This is evidenced by its low beta of 0.888, indicating lower volatility than the market, though recent price action has diverged from this characteristic.
- High Return on Equity: SCI delivers a very high return on equity of 33.12%, demonstrating efficient use of shareholder capital and strong profitability from its market-leading position. This metric significantly outpaces typical sector averages, justifying a valuation premium.
- Analyst Sentiment Remains Bullish: Despite limited coverage, the few institutional analysts covering SCI (UBS, Oppenheimer, Raymond James) maintain consistent 'Buy' or 'Outperform' ratings. This reflects a professional view of the company as a reliable, cash-generative operator within its niche sector.
Bearish
- Severe Relative Underperformance & Weak Momentum: SCI has dramatically underperformed the market, with a 1-year price change of +1.03% vs. the S&P 500's +25.19%, resulting in a -24.16% relative strength deficit. Recent momentum is decisively negative, with the stock down -3.52% over the past month while the S&P 500 gained +5.6%.
- Stagnant Revenue & Decelerating Growth: Revenue growth is minimal and appears to be decelerating. Q4 2025 revenue of $1.11 billion grew only 1.69% YoY, and revenue has fluctuated within a narrow band over the last four quarters, indicating a lack of organic growth trajectory.
- High Financial Leverage & Liquidity Concern: The company carries significant debt with a debt-to-equity ratio of 3.14, which increases sensitivity to higher interest rates. Furthermore, the current ratio of 0.55 indicates limited short-term liquidity to cover current obligations, posing a financial risk.
- Valuation Premium Amidst Stagnation: SCI's trailing P/E of 20.35x trades at a premium to typical defensive sector averages (often in the mid-to-high teens). This premium valuation is difficult to justify given the company's stagnant revenue growth of ~1.7% and recent margin pressure, as seen in the Q4 net margin decline to 14.34% from 15.04% a year ago.
SCI Technical Analysis
The stock is in a pronounced downtrend and consolidation phase, with a 1-year price change of only +1.03% significantly underperforming the S&P 500's +25.19% gain, resulting in a stark -24.16% relative strength deficit. Currently trading at $77.74, the price sits just 12% above its 52-week low of $74.99 and 12% below its 52-week high of $88.67, indicating it is trading near the lower end of its annual range, which may suggest a value opportunity but also reflects persistent selling pressure and weak momentum. Recent momentum is decisively negative, with the stock down -3.52% over the past month and -2.41% over the past three months, both periods starkly contrasting with the S&P 500's gains of +5.6% and +8.42%, respectively; this severe underperformance signals a clear breakdown in relative strength and a bearish divergence from the broader market rally. Key technical levels are the 52-week low of $74.99 as critical support and the 52-week high of $88.67 as major resistance; a breakdown below $74.99 would likely trigger further technical selling, while a sustained move above $88.67 would be needed to signal a new uptrend. With a beta of 0.888, the stock exhibits slightly less volatility than the overall market, which is typical for a defensive business, but its recent price action shows it is failing to participate in market rallies, highlighting specific company or sector-related headwinds.
Beta
0.89
0.89x market volatility
Max Drawdown
-12.5%
Largest decline past year
52-Week Range
$75-$89
Price range past year
Annual Return
-0.9%
Cumulative gain past year
| Period | SCI Return | S&P 500 |
|---|---|---|
| 1m | -8.3% | +5.5% |
| 3m | -3.1% | +7.7% |
| 6m | -3.9% | +12.7% |
| 1y | -0.9% | +27.4% |
| ytd | -0.6% | +8.9% |
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SCI Fundamental Analysis
Revenue growth is modest and appears to be decelerating; the most recent quarterly revenue (Q4 2025) was $1.11 billion, representing a year-over-year growth of only 1.69%, and a sequential decline from the $1.07 billion reported in Q1 2025. Over the last four quarters, revenue has fluctuated between $1.05 billion and $1.11 billion, indicating stagnation rather than a strong growth trajectory. The company remains profitable with a net income of $159.4 million in Q4 2025, but profitability metrics show some pressure as the net margin of 14.34% in that quarter declined from 15.04% in the year-ago Q4 period; gross margin for Q4 2025 was 28.04%, down from 27.99% a year prior, showing stability but not expansion. The quarterly net income trend has been volatile, ranging from a low of $117.5 million in Q3 2025 to the recent $159.4 million, reflecting potential cyclicality or one-time items impacting earnings. The balance sheet carries significant financial leverage with a debt-to-equity ratio of 3.14, which is high and increases interest rate sensitivity, but the company generates robust cash flow, with trailing twelve-month free cash flow of $599.2 million. This strong FCF, yielding approximately 5.4% based on the market cap, supports the dividend and share buybacks, as evidenced by a payout ratio of 33.8% and consistent stock repurchases visible in the cash flow statements; however, the current ratio of 0.55 indicates limited short-term liquidity relative to current obligations.
Quarterly Revenue
$1.1B
2025-12
Revenue YoY Growth
+0.01%
YoY Comparison
Gross Margin
+0.28%
Latest Quarter
Free Cash Flow
$599187000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is SCI Overvalued?
Given the company's consistent profitability with a positive net income, the primary valuation metric is the Price-to-Earnings (P/E) ratio. The trailing P/E stands at 20.35x, while the forward P/E is lower at 17.07x, indicating analysts expect earnings growth in the coming year. The forward P/E discount suggests the market is anticipating an improvement in earnings, potentially from cost management or stable demand in its defensive sector. Compared to sector averages, SCI's valuation presents a mixed picture; its trailing P/E of 20.35x is above the typical market average for stable, defensive companies, which often trade in the mid-to-high teens, indicating a premium. This premium may be justified by the company's market-leading position, high return on equity of 33.12%, and stable cash flows, which are attractive in uncertain economic climates. Historically, the stock's own P/E ratio has fluctuated significantly, ranging from lows around 9.5x in early 2021 to highs above 28x in late 2022; the current trailing multiple of 20.35x sits near the middle of this historical range, suggesting the stock is neither excessively cheap nor expensive based on its own history, but rather priced for steady, low-growth performance.
PE
20.3x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 9x~29x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
12.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks are centered on SCI's significant leverage and stagnant growth. The debt-to-equity ratio of 3.14 is high, increasing interest expense sensitivity in a higher-rate environment. Concurrently, revenue growth has decelerated to just 1.69% YoY in Q4 2025, with quarterly revenue showing no clear upward trajectory, raising questions about the company's ability to grow organically beyond its consolidator model. Furthermore, a current ratio of 0.55 indicates tight short-term liquidity, which could pressure operations if cash flow generation falters.
Market & Competitive Risks stem from valuation compression and sector neglect. Trading at a trailing P/E of 20.35x—a premium to typical defensive stocks—SCI is vulnerable to multiple contraction if its modest growth fails to meet expectations. The stock's severe underperformance (a -24.16% relative strength deficit vs. the S&P 500 over one year) highlights it is being shunned by the market rally, suggesting sector rotation away from low-growth stories. While competitive disruption is low in the fragmented deathcare industry, the primary risk is that the market continues to reprice defensive, low-growth stocks at lower multiples.
Worst-Case Scenario involves a combination of rising interest rates increasing debt servicing costs, a recessionary dip in pre-need sales impacting future revenue visibility, and a sustained market rotation away from premium-valued, low-growth stocks. This could trigger a breakdown below the critical 52-week low support of $74.99, leading to a re-rating towards its historical P/E low near 9.5x. Applying that multiple to the forward EPS estimate of $5.07 implies a downside target near $48, representing a potential loss of approximately -38% from the current price of $77.74.
FAQ
The key risks are, in order of severity: 1) Financial Risk: High debt leverage (D/E of 3.14) and a weak current ratio (0.55) make the company sensitive to rising interest rates and potential liquidity crunches. 2) Growth Risk: Revenue growth has decelerated to just 1.69% YoY, indicating a lack of organic growth drivers which challenges its premium valuation. 3) Market Risk: The stock has shown severe relative weakness, underperforming the S&P 500 by -24.16% over one year, suggesting it is out of favor and vulnerable to further sector rotation. 4) Visibility Risk: Extremely limited analyst coverage reduces institutional visibility and can lead to higher volatility and inefficient price discovery.
The 12-month forecast presents three scenarios with associated probabilities. The Base Case (60% probability) sees the stock trading between $77 and $85, as it grinds sideways executing its stable, cash-generative business. The Bull Case (25% probability) targets a range of $88.67 to $95, driven by a market rotation into defense and earnings beats. The Bear Case (15% probability) warns of a drop to between $48 and $75 if high rates pressure margins and trigger multiple compression. The Base Case is most likely, predicated on the assumption that SCI's high FCF yield provides a floor, but its growth challenges cap significant upside.
SCI appears fairly valued to slightly overvalued. Its trailing P/E of 20.35x trades at a premium to many defensive sector peers, which is partially justified by its high ROE of 33.12% and strong cash flows. However, this premium is difficult to sustain given the company's stagnant revenue growth. The forward P/E of 17.07x, based on an EPS estimate of $5.07, suggests the market is pricing in modest earnings growth. Compared to its own historical P/E range (from ~9.5x to 28x), the current multiple is in the middle, indicating the market is paying a fair price for steady, low-growth performance.
SCI is a conditional buy, suitable primarily for conservative, income-focused investors with a long-term horizon who prioritize stability over growth. The current price offers a compelling ~5.4% free cash flow yield and a steady dividend, but the stock carries significant risks including high leverage (Debt/Equity of 3.14) and anemic revenue growth (~1.7%). Given its severe underperformance and lack of near-term catalysts, it is not a good buy for traders or growth investors. A patient investor might find value at lower prices, particularly if the stock tests its 52-week low support.
SCI is unequivocally suited for long-term investment, with a suggested minimum holding period of 3-5 years. Its low beta (0.888) and defensive business model are characteristics of a long-term holding for portfolio stability and income. The stock's recent poor momentum and lack of near-term catalysts make it a poor candidate for short-term trading. Long-term investors can benefit from the compounding effect of reinvested dividends and wait for potential multiple expansion cycles, while weathering periods of underperformance like the current one.