Service Corporation (SCI) looks solid, gains around 10% in 3 months


International service company SCI has benefited from an increase in funeral services and an increase in burials in its cemeteries, especially amid the pandemic. In addition, the company’s focus on real estate development has paid off. Rising funerals and burials, along with a robust cost structure, fueled the first quarter 2020 results for this provider of death care products and services. In addition, management has raised its profit forecast for 2021.

Encouragingly, Zacks’ consensus estimate for 2021 earnings has risen 7.4% to $ 2.89 per share over the past 60 days. Additionally, shares of this company Zacks Rank # 2 (Buy) have gained 9.6% in the past three months, far outpacing industry growth of 4.1%. In fact, the company also outperformed the Zacks Consumer Staples sector and the respective increases of 8.3% and 7.8% in the S&P 500. Let’s take a closer look.

Service Corporation International Award, Consensus and EPS Surprise

Service Corporation International Award, Consensus and EPS Surprise

Service Corporation International price-consensus-eps-surprise-chart | International Service Corporation Quote

Q1 solid and elevated view

In the first quarter of 2021, profit and revenue improved year over year and exceeded Zacks’ consensus estimate. Incidentally, the Funeral and Cemeteries segments benefited from higher base revenues. The net result was supported by a high gross profit, resulting from the increase in funeral services and burials performed as well as a strong increase in prerequisite income recognized by cemeteries. In addition, net income benefited from the reduction in shares outstanding and lower interest costs.

Based on the strong performance seen in the first quarter, management has raised its earnings guidance for 2021. It now expects adjusted earnings per share of between $ 2.70 and $ 3.00, down from 2.50 to $ 2. $ 90 previously planned. The company’s forecast for the year is wider than usual due to uncertainty surrounding the impact of COVID-19. We note that the company’s earnings amounted to $ 2.91 per share in 2020. Additionally, management has advised that the company is on the right track with its long-term earnings growth framework. As a result, it will continue to focus on its core strategies which include revenue growth by remaining relevant to client families, leveraging scale and maximizing capital deployment opportunities.

Zacks investment research

Zacks investment research

Image source: Zacks Investment Research

Other advantages

The company remains committed to pursuing strategic buyouts for both segments and building new funeral homes to generate better returns. In the first quarter of 2021, the company incurred capital expenditures of $ 42.3 million. She undertook several development and construction projects of cemeteries. These investments should pay off for the business in the short term. Spending associated with capital improvements at current locations and cemetery development is expected to range from $ 235 million to $ 255 million in 2021.

Revenues from the Cemetery segment have increased in recent quarters. In the first quarter, segment revenue increased 53.8% to $ 458.5 million, driven by higher core revenue. Base income was derived from an increase in both requirement and total recognized prerequisite income. Comparable cemetery incomes improved 53.9% year over year thanks to higher base incomes. This, in turn, was fueled by recognized high provident income due to comparable strong production from provident graveyard property sales. In addition, atneed’s revenue growth, which stems from an increase in burials performed, has been an asset.

Comparable production of pre-requisite cemeteries sales increased 67.1% due to strong sales growth, sales averages and sales speed. The company continued to benefit from an efficient sales force, prudent use of CRM systems and improved conversion rates through direct mail and digital prospecting campaigns. Additionally, the company continued to experience high conversion and close rates, thanks to increased customer awareness of the possible effects of the coronavirus. There has also been an increase in traffic to the scene due to the increase in funeral services and burials performed. Strong revenues, along with an improved cost structure, also fueled the segment’s gross profit and margin.

Obviously, it looks like Service Corporation is about to continue its magnificent show.

3 other basic consumer actions not to miss

Medifast MED, which currently carries a Zacks Rank # 1 (Strong Buy), has a surprise four-quarter earnings of 12.7%, on average. You can see The full list of today’s Zacks # 1 Rank stocks here.

Transportation services CSV has a Zacks Rank # 2 and its net income has beaten Zacks’ consensus estimate by 36.4% on average over the past four quarters.

Nomadic foods NOMD has a Zacks Rank # 2 and its net income has exceeded Zacks’ consensus estimate by 10.3% on average over the past four quarters.

Zacks names “best single choice to overtake”

Among thousands of stocks, 5 Zacks experts each chose their favorite to skyrocket + 100% or more in the coming months. Of these 5, research director Sheraz Mian chooses one to have the most explosive advantage of all.

You’ve known this company from its past glory days, but few would expect it to be ready for a monster turnaround. Fresh out of a successful repositioning and flush with A-List celebrity mentions, it could rival or overtake other recent Zacks stocks which are expected to double as Boston Beer Company which climbed + 143.0% in just a bit. more than 9 months and Nvidia which climbed + 175.9% in a year.

Free: see our best stock and 4 finalists >>

Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report

Carriage Services, Inc. (CSV): Free Stock Analysis Report

Service Corporation International (SCI): Free Stock Analysis Report

MEDIFAST INC (MED): Free stock analysis report

Nomad Foods Limited (NOMD): Free Stock Analysis Report

To read this article on Zacks.com, click here.

Zacks investment research


About Cindy Johnson

Check Also

King’s Lynn windsurfer funeral as body found in Sweden

A tribute was paid to Chris Bamfield, a windsurfer who went missing from Hunstanton in …

Leave a Reply

Your email address will not be published.