This article from Seeking Alpha suggests that the largest funeral home and cemetery operator in North America, Service Corporation International (SCI) is a buying opportunity for investors.  To that end, the article makes these points:

• “Historically, SCI has delivered very strong financial performance and shareholder returns.”

• “. . .growth has been fueled by a significant consolidation strategy. While SCI is the industry leader, the deathcare industry remains highly fragmented.”

• “. . .the company has a number of years before it faces significant debt maturities.”

• “SCI has a strong history of returning capital to shareholders and recently increased its dividend and buyback authorization.”

• “SCI trades at a below market multiple but has delivered above market earnings growth historically. “

• “SCI is trading at an attractive valuation to both the consumer staples and consumer discretionary sectors as well.”

• “Over the past 10 years, SCI has delivered a total return of 303% compared to a total return of 204% delivered by the S&P 500.”

 

Article note  —  The article was written on December 4, 2023.  Today, is December 13th and it should be noted that on December 4th SCI stock traded at $62.73 per share.  Yesterday, December 12th, as I am finishing writing this article the stock closed at a price of $66.18 . . that’s already an over 5% gain since the article was published.

Disclaimer —  The author of this article for Funeral Director Daily holds a stock position in Service Corporation International.

 

Funeral Director Daily take:  This is a really good article on Service Corporation International and the funeral business in general.  Most financial articles from people outside of the profession don’t take into the risk factor of lower revenues per service that may come from increased cremation services over traditional burial services. . . this writer brings up that issue.

 

However, the writer fails to recognize the growing trend of direct cremations with no services which, from my point of view, is an even greater risk than cremations in general for companies with high leverage coupled with high fixed costs such as ownership and operation of large facilities.

 

All in all, a good article and worth the read to learn more about the death care business and SCI in general.

 

More news from the world of Death Care:

• It’s your funeral.  Here’s how to plan so your loved ones don’t have to.  Minneapolis Star Tribune (MN)
• Cemeteries are stepping up to offer green burial.  The Daily Mining Gazette (MI)
• Pure Cremation funeral services offer you the freedom to choose.  Manchester Evening News (Great Britain)
• Cremation wait grows longer in Japan’s rapidly graying society.  The Asahi Shimbun (Japan)
• “We provide way more selection”:  Why buying a casket online can save you a bundle.  Morningstar
• Exclusive:  Chesapeake funeral home storing human remains in garage despite attorney’s denial.  Video Story and print article.  Yahoo News

 

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