Service Corporation International
SCI
$85.34
-0.30%
Service Corporation International (SCI) is the largest provider of funeral and cemetery services in North America, operating a network of funeral homes, cemeteries, and cremation facilities across the United States and Canada. As a dominant player in the highly fragmented deathcare industry, SCI leverages its scale, brand recognition, and integrated service model to maintain a competitive edge. The current investor narrative centers on the company's defensive characteristics, steady cash generation, and consistent dividend growth, which have become increasingly attractive in a volatile market. Recent attention has also focused on SCI's ability to navigate changing consumer preferences toward cremation and its strategic acquisitions to drive long-term growth.…
SCI
Service Corporation International
$85.34
Related headlines
Investment Opinion: Should I buy SCI Today?
Based on the analysis, SCI is rated as a Buy. The company's defensive business model, consistent cash generation, and strong analyst consensus (Strong Buy, average target $96.67) support this rating. The stock offers a 12.2% upside to the average target, with a low target still implying a 4.4% gain, indicating limited downside risk.
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SCI 12-Month Price Forecast
The AI assessment leans bullish on SCI due to its defensive nature, consistent cash flows, and positive analyst sentiment. The stock's valuation is reasonable relative to peers, and its low beta makes it a suitable holding for risk-averse investors. However, the low growth rate and high debt levels temper enthusiasm, warranting a medium confidence. If revenue growth accelerates or debt is reduced, the stance could become more bullish; conversely, a deterioration in margins or a rise in interest rates would prompt a downgrade.
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 $100.33 and implied upside of +17.6% versus the current price.
Average Target
$100.33
0 analysts
Implied Upside
+17.6%
vs. current price
Analyst Count
—
covering this stock
Price Range
$97 - $105
Analyst target range
SCI has coverage from 6 analysts, with a consensus recommendation of 'Strong Buy' and a mean recommendation score of 1.33 (where 1 is Strong Buy and 5 is Sell). The average price target is $96.67, implying an upside of 12.2% from the current price of $86.19. The target range spans from $90.00 to $100.00, with the low target still representing a 4.4% upside, indicating that even the most bearish analyst sees value in the stock. The high target of $100.00 suggests potential for a 16.0% gain, likely assuming continued stable growth and successful execution of its acquisition strategy. Recent institutional ratings have been consistently positive, with firms like UBS, Oppenheimer, and Raymond James maintaining Buy or Outperform ratings, reflecting strong conviction in SCI's defensive business model and cash flow generation.
Bulls vs Bears: SCI Investment Factors
SCI presents a balanced investment case with strong defensive characteristics, stable cash flows, and a solid dividend, but faces challenges from high leverage and limited growth prospects. The bull case is supported by analyst optimism and a strong market position, while the bear case highlights valuation concerns and the cremation trend. Currently, the evidence slightly favors the bull side due to the company's resilience and consistent performance, but the key tension lies in whether SCI can generate sufficient growth to justify its premium valuation. If revenue growth accelerates or margins expand, the stock could re-rate higher; otherwise, it may remain range-bound.
Bullish
- Defensive industry with stable demand: SCI operates in the deathcare industry, which has consistent demand regardless of economic cycles. This is reflected in its low beta of 0.845, indicating less volatility than the market, and its steady revenue growth of 1.7% YoY in Q4 2025, providing a reliable revenue stream.
- Strong analyst consensus and upside: With a 'Strong Buy' consensus from 6 analysts and an average price target of $96.67, the stock has a 12.2% upside from its current price of $86.19. Even the lowest target of $90.00 implies a 4.4% gain, showing broad confidence in the company's prospects.
- Consistent dividend and shareholder returns: SCI has a dividend yield of 1.66% and a payout ratio of 33.8%, indicating a sustainable dividend policy. The recent declaration of a quarterly cash dividend reinforces its commitment to returning capital to shareholders, making it attractive for income-focused investors.
- Efficient operations and healthy margins: The company's net margin of 14.3% in Q4 2025 and operating margin of 22.6% demonstrate efficient cost management. Free cash flow of $599 million TTM provides ample liquidity for debt reduction and acquisitions, supporting long-term growth.
Bearish
- High debt levels and leverage: SCI's debt-to-equity ratio of 3.14 is elevated, indicating significant leverage. This increases financial risk, especially if interest rates rise or cash flows decline, potentially constraining growth and dividend sustainability.
- Low growth and high valuation: Revenue growth is modest at 1.7% YoY, and the PEG ratio of 2.8 suggests the stock is overvalued relative to its growth rate. The forward PE of 18.8x is at a premium to the industry average of 22x, leaving little room for error.
- Cremation trend threatens revenue: The shift toward cremation, which is cheaper than traditional burials, could pressure revenue per service. This secular trend may limit SCI's ability to grow revenue, as cremation services typically generate lower margins.
- Interest rate sensitivity: With a high debt load, SCI is sensitive to interest rate changes. Rising rates could increase interest expenses, which were $64.1 million in Q4 2025, potentially squeezing net income and reducing cash available for dividends and acquisitions.
SCI Technical Analysis
SCI's stock has demonstrated a robust recovery over the past year, with a 1-year price change of +12.9%, currently trading at $86.19, which is approximately 95% of its 52-week range (low of $68.41, high of $90.99). This positioning near the upper end of the range indicates strong momentum and investor confidence, though it also suggests the stock may be approaching overbought territory. The stock's beta of 0.845 indicates it is less volatile than the broader market, making it a relatively stable holding in a defensive sector.
Beta
0.82
0.82x market volatility
Max Drawdown
-21.6%
Largest decline past year
52-Week Range
$68-$91
Price range past year
Annual Return
+8.3%
Cumulative gain past year
| Period | SCI Return | S&P 500 |
|---|---|---|
| 1m | +9.7% | +2.5% |
| 3m | +8.7% | +5.2% |
| 6m | +0.3% | +11.5% |
| 1y | +8.3% | +22.6% |
| ytd | +10.5% | +12.9% |
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SCI Fundamental Analysis
SCI's revenue trajectory shows modest but steady growth, with the most recent quarter (Q4 2025) reporting revenue of $1.11 billion, a 1.7% year-over-year increase. Over the past year, quarterly revenue has ranged from $1.06 billion to $1.11 billion, indicating a stable, low-growth business model typical of the deathcare industry. The company's net income for Q4 2025 was $159.4 million, with a net margin of 14.3%, reflecting efficient cost management. Gross margin for the quarter was 28.0%, which is consistent with the company's historical performance and industry norms, though slightly below the 28.1% reported in Q4 2024.
Quarterly Revenue
$1.1B
2025-12
Revenue YoY Growth
+1.7%
YoY Comparison
Gross Margin
28.0%
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 SCI's positive net income, the price-to-earnings (PE) ratio is the most appropriate valuation metric. The trailing PE is 20.4x, while the forward PE is 18.8x, indicating that the market expects earnings growth of approximately 8.5% over the next year. This forward discount suggests a positive outlook, but the PEG ratio of 2.8x implies that the stock may be overvalued relative to its growth rate, which is typical for a mature, defensive company. Compared to the industry average PE of 22x, SCI trades at a slight discount of 7%, which is justified by its stable but slower growth profile.
PE
20.4x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 12x~25x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
12.0x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are notable for SCI, primarily stemming from its high debt-to-equity ratio of 3.14, which indicates significant leverage. This leverage increases vulnerability to rising interest rates, as interest expenses of $64.1 million in Q4 2025 could escalate, pressuring net income. The company's current ratio of 0.55 suggests potential liquidity concerns, though its stable cash flows from the deathcare industry provide some cushion. Additionally, revenue growth is minimal at 1.7% YoY, and any downturn in consumer spending on funerals could impact results, though demand is generally inelastic.
FAQ
The key risks include high financial leverage (debt-to-equity of 3.14), which increases sensitivity to interest rates, and the secular trend toward cremation, which could reduce revenue per service. Additionally, the stock's low growth rate may lead to underperformance in a bull market. Macro risks include economic downturns, though demand for funeral services is relatively inelastic. The most severe risk is a combination of rising rates and declining volumes, which could pressure cash flows and dividends.
The 12-month forecast for SCI is moderately bullish. The base case, with a 50% probability, sees the stock reaching $90-$96, while the bull case (30% probability) targets $95-$100. The bear case (20% probability) could see it fall to $68-$75. The most likely scenario is the base case, driven by stable growth and continued dividend increases, with the stock trading near the average analyst target of $96.67.
SCI's trailing PE of 20.4x and forward PE of 18.8x are slightly below the industry average of 22x, suggesting it is fairly valued. The PEG ratio of 2.8 indicates overvaluation relative to growth, but this is typical for defensive stocks. The market expects modest earnings growth of 8.5%, which justifies the premium. Overall, SCI is not overvalued, but it is not a bargain either.
SCI is a good buy for investors seeking a defensive, income-generating stock with low volatility. With a 'Strong Buy' consensus and a 12.2% upside to the average target, the risk/reward is favorable. However, the high debt levels and low growth mean it may not suit aggressive growth investors. For those with a long-term horizon and a preference for stability, SCI offers a compelling opportunity.
SCI is best suited for long-term investment due to its defensive nature, stable cash flows, and dividend growth. Its low beta of 0.845 makes it less volatile, but also limits short-term trading opportunities. Investors should consider a minimum holding period of 3-5 years to fully benefit from dividend compounding and potential capital appreciation. Short-term traders may find limited upside, but the stock can serve as a portfolio stabilizer.