Seeking Alpha contributiing author Daniel Jones published an article this week titled, “Service Corporation International:  You might want to hold this one until your last breath”.

 

It is a very interesting article that uses both SCI financial data and United States birth and death data to make a case that SCI, as a company is probably a good investment for the long haul.  The article also makes good use of graphs to tell its story.  You can access the article here.

 

As always, Funeral Director Daily does not take a particular side of the issues presented other than to present them to you for your own opinions.  Here are some quotes from the article:

 

• “Service Corporation International remains a dominant player in the US and Canadian funeral and cemetery industry, with strong growth prospects.”

• “SCI’s revenue, profits, and cash flows continue to rise, driven by population growth and increasing demand for death care services.”

• “Unless you expect a world-ending catastrophe, you can expect revenue growth achieved by Service Corporation International to continue for the long haul.”

• “While many countries, like Japan, South Korea, and China, are seeing populations decline, the US continues to see population growth, largely because of immigration.”

 

 

The above chart shows the steady population growth in the United States from 1950 to the present.  The article states, “In 2024, it (the U.S. population) hit an all-time high of 345.4 million. That’s up an astounding 22.7%, or 64.9 million, since the year 2000.”

 

And, here is another chart from the article which shows a continuing growth of population up to 2050 where the hypothesis is that the  United States population will reach 380.8 million —  that’s another 10% increase from 2024.

 

 

Here is a quote from the article that pertains to the above chart and the idea of the country’s Median Age rising, “It’s unclear what the future holds. We do know that, by 2050, the US population is expected to grow to 380.8 million. The median age is forecasted to grow to about 41.9 years. Currently, the Congressional Budget Office expects an overall decline in the mortality rate. But not everybody agrees with that. The Institute for Health Metrics and Evaluation, for instance, expects issues like drug use to challenge the common narrative that mortality rates will actually decline even as the population of the US continues aging.”

 

Author Daniel Jones somewhat combines the idea of more deaths with the idea of SCI as North America’s largest Death Care provider to make this statement, “But what is undeniable is that a growth in the overall size of the population is guaranteed to cause the number of deaths to grow. This certainly bodes well for a company such as Service Corporation International.”

 

Related Article — Here’s a recent article from CBS New’s 60 Minutes Overtime that questions what might happen if the United States continues to see a decline in natural born birth rates.  It is titled “The Trends behind the historically low U.S. Birth Rate” and can be accessed here.

 

Funeral Director Daily take:  I think Seeking Alpha author Daniel Jones has a good handle on Service Corporation International as a company and on his insights into the United States population dynamics.  Putting those two things together easily leads one to believe that if you are the biggest in a growing industry, as that industry grows with opportunity, your company should enjoy the most growth.

 

That makes a lot of sense. . . .But I’ve also learned over my life that things don’t always happen in a vacuum.  In this case there are a host of other issues surrounding Death Care choice that it is not as easy as saying 1 + 1 = 2.

 

While Service Corporation International seems to be making all the right moves in moving in line with society’s Death Care choices — such as making arrangements with at least one of the professions natural organic reduction providers —  there is no guarantee that Death Care clientele will continue to use traditional funeral homes in the same numbers as they do today.  And, if over the next couple of decades SCI cannot move in sync with what consumers want. . . . a larger population (and more deaths) may be no help at all to them.

 

In my opinion, Death Care is now all about staying relevant with the consumers you are going to serve.  Yes, with the caveat that it is also somewhat geographic location related, the more deaths in your area the more business you should have.  However, I also think Death Care is in a unique position among consumers where habits and methods of use are changing and growth, even with more deaths, will take the right “moves” by existing Death Care businesses to continue to grow.

 

Disclaimer — The author of this article for Funeral Director Daily is a shareholder of Service Corporation International.

 

More news from the world of Death Care:

• Green Lawn Cemetery in Columbus is designed as a resting place for the dead and the living.  AOL
• So, I married a funeral director.  Bozeman Daily Chronicle (MT)

 

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