Service Corporation International (SCI) Market Cap

Service Corporation International (SCI) has a market capitalization of $12.04B, based on the latest available market data.

Financials updated after earnings reported 2025-12-31.

Sector: Consumer Cyclical
Industry: Personal Products & Services
Employees: 25000
Exchange: New York Stock Exchange
Headquarters: Houston, TX, US
Website: https://www.sci-corp.com

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📘 SERVICE (SCI) — Investment Overview

🧩 Business Model Overview

Service Corporation International (NYSE: SCI) is North America’s largest provider of funeral, cremation, and cemetery services. The company operates a network of funeral service locations and cemeteries, offering a comprehensive selection of end-of-life services. SCI operates under a portfolio of well-established brands, which allows it to maintain a local presence and strong relationships with communities, while benefiting from the scale and operational efficiencies of a large organization. The company’s strategy combines a mix of acquisitions, organic growth, and pre-need sales initiatives to build a resilient and sustainable business model in a sector characterized by stable long-term demand.

💰 Revenue Streams & Monetisation Model

SCI generates revenue through two primary business segments: funeral operations and cemetery operations. - Funeral Operations: This segment provides traditional funeral services, including arrangements, memorial services, and merchandise sales. It also encompasses cremation, a growing segment within the industry. - Cemetery Operations: This segment involves the sale of cemetery property (such as plots, crypts, or mausoleums), memorials, and related services. SCI also earns income from ongoing cemetery maintenance and perpetual care arrangements. A significant portion of SCI’s business is generated through pre-need sales, where customers arrange and pay for funeral or cemetery services in advance of need. This approach not only creates a forward book of business, providing predictable and recurring cash flows, but also creates opportunities for trust fund investment income.

🧠 Competitive Advantages & Market Positioning

SCI holds a leading position in the North American deathcare industry, marked by high market share and extensive geographic diversification. Its competitive advantages include: - Scale and Network Effects: SCI’s nationwide network enables cost efficiencies in purchasing, back-office operations, and marketing. The company can better negotiate with suppliers and leverage centralized systems. - Brand Portfolio: Operating under recognized local brands fosters trust, which is critical in a high-sensitivity, relationship-driven sector. - Pre-need Sales Platform: With the industry’s largest pre-need backlog, SCI enjoys a unique sales force and process advantage, anchoring future cash flows. - Regulatory and Capital Barriers: Significant regulatory oversight and the need for substantial upfront capital investment restrict new entrants, helping SCI defend its market position. - Acquisition Track Record: SCI’s disciplined approach to acquiring and integrating independent operators has steadily grown market share without disrupting operations or eroding its community-centric reputation.

🚀 Multi-Year Growth Drivers

Multiple structural and company-specific drivers support SCI’s long-term growth prospects: - Aging Demographic Trends: The increasing senior population in North America structurally expands the company's addressable market over time. - Rising Pre-Need Penetration: As consumers become more aware of the benefits of advance planning, SCI’s pre-need sales channel provides revenue visibility and margin stability. - Market Consolidation: The industry remains highly fragmented, facilitating ongoing acquisition opportunities at attractive multiples. - Service & Product Innovation: The growing acceptance and demand for cremation, digital memorialization, and customizable services aligns with evolving consumer preferences, offering cross-sell and upsell opportunities. - Margin Expansion: Through operational efficiency and digital initiatives, SCI has potential to drive profitability through better cost management and automation.

⚠ Risk Factors to Monitor

Despite its defensive business model, several risks warrant close monitoring: - Cremation Pricing Pressure: The shift towards lower-priced cremation services could compress average revenue per customer. - Regulatory Environment: The industry is subject to federal, state, and local regulation. Changes to trust fund requirements or sales practices could impact operational flexibility and profitability. - Reputational Risk: Trust and community perception are fundamental; operational missteps or negative publicity could impair business performance. - Acquisition Integration: The pace and effectiveness of integrating acquired businesses is key to sustaining margin and cultural cohesion. - Interest Rate Exposure: A portion of SCI’s earnings are tied to returns on pre-need trusts, which are sensitive to long-term interest rate trends and capital market volatility. - Secular Decline in Traditional Services: Families increasingly favor personalized or alternative forms of memorialization, challenging legacy product mixes.

📊 Valuation & Market View

SCI’s shares have historically been valued as a stable, defensive investment, featuring steady cash flow generation and modest organic growth prospects. The recurring nature of deathcare demand and high barriers to entry support premium valuation multiples compared to broad market averages. The company’s flexible capital allocation strategy – balancing reinvestment, dividend growth, and buybacks – appeals to both income-seeking and growth-oriented investors. Market consensus supports the view that continued demographic tailwinds, along with accretive acquisitions and pre-need sales momentum, support a consistent multi-year earnings and free cash flow growth trajectory. Analytical models often emphasize discounted cash flow and sum-of-the-parts valuations to capture the intrinsic value of SCI’s trust assets and operating businesses.

🔍 Investment Takeaway

Service Corporation International stands as a compelling play on long-term demographic and social trends. Its leading market position, resilient business model, and disciplined consolidation strategy have fostered durable competitive advantages. The company’s dual focus on organic growth and strategic acquisitions provides a robust pipeline for revenue expansion and cash generation. While there are sector-specific risks – particularly around changing consumer behaviors and regulatory dynamics – SCI’s substantial pre-need backlog and efficient operations underpin its investment case. For investors seeking both steady returns and exposure to a stable, non-cyclical industry, SCI offers a differentiated opportunity balanced by prudent risk management and proven execution.

⚠ AI-generated — informational only. Validate using filings before investing.

📢 Show latest earnings summary

SCI Q4 2025 Earnings Summary

Overall summary: SCI delivered solid Q4 and FY25 results with EPS growth, preneed momentum, and cemetery margin expansion despite funeral mix and commission headwinds. Management guided to 2026 EPS growth of 5%–13% with targeted gross margin expansion in both segments, robust $1.0–$1.06 billion operating cash flow, and continued disciplined capital deployment. Liquidity and leverage remain strong after a new $2.5 billion credit facility. While cremation mix, commission rates, and insurance-funded mix create some margin friction, the outlook is confident and balanced by preneed growth, cost discipline, and shareholder returns.

Growth

  • Q4 adjusted EPS $1.14, up 8% y/y (from $1.06)
  • FY25 adjusted EPS $3.85, up 9% y/y (would have been $3.92, +11% y/y, at constant tax rate)
  • Comparable funeral revenue +$3m (<1%) with core average revenue per service +3.2%
  • Non-funeral home average revenue per service +>11% y/y
  • Funeral preneed sales production +$29m (+~11%) in Q4; core +12%, non-funeral home +8%
  • Comparable cemetery revenue +$5m (~1%); cemetery gross margin +70 bps with operating margin >36%
  • Cemetery preneed sales production +$8m (~2%) in Q4; FY25 +~4%
  • 2026 EPS guidance $4.05–$4.35 (+5% to +13% y/y; midpoint +9%)
  • 2026 adjusted operating cash flow guidance $1.0b–$1.06b

Business development

  • Rolled insurance-funded product to 100% of SCI Direct locations by year-end 2025
  • Shifted sales counselor compensation mix toward more fixed vs. variable
  • Operational decision to stop delivering preneed merchandise at time of sale, increasing future backlog value
  • Acquired businesses in NC, AZ, FL, and Canada; $101m acquisition spend in 2025
  • Invested in new funeral home construction, expansions, and real estate; 2025 growth capex $79m
  • Continued digital strategy investments ($8m in Q4; $25m planned for 2026)

Financials

  • Q4: modest revenue and gross profit increases in both funeral and cemetery segments
  • Funeral: comparable revenue +$3m; core services volume -1.9%; core general agency and other revenue -$8m (~13%) due to lower commission rate and higher cancellations from insurance partner transition
  • Funeral gross profit -~$4m; gross margin down ~70 bps to ~21% on higher recognized selling costs (+$5m)
  • Cemetery: other revenue +$8m (higher endowment care trust income); core revenue -$3m (atneed -$3m); recognized preneed revenue flat
  • Cemetery gross profit +$5m (~3%); margin expansion +70 bps; fixed cost growth slightly >1%
  • Q4 adjusted operating cash flow $213m (above guidance); FY25 adjusted operating cash flow $966m (+$108m or +11% y/y excluding taxes/specials)
  • Corporate G&A $34m in Q4; prior year benefited from a $20m legal reserve reduction; normalized Q4 G&A down ~$1m y/y
  • 2026 corporate G&A expected $40m–$42m per quarter

Capital & funding

  • Returned $107m to shareholders in Q4 ($59m buybacks at ~$79/share; $48m dividends)
  • FY25 capital returned $645m ($461m buybacks; $184m dividends); shares outstanding just under 140m
  • Post year-end: repurchased ~500k shares for ~$40m at ~$80/share
  • Q4 capital invested $174m; FY25 maintenance capex $328m; total 2025 capital in key categories $508m
  • 2026 plan: maintenance capex ~$325m ($135m locations, $165m cemetery development, $25m digital); growth capex $70m–$80m; acquisitions $75m–$125m
  • New $2.5b bank credit facility (Nov) with $750m term loan and $1.7b revolver, both maturing Nov 2030; liquidity ~$1.7b
  • Net leverage just above 3.65x (lower end of 3.5x–4.0x target)
  • 2026 cash taxes expected ~$120m (decline of ~$20m) due to renewable energy tax benefits; effective tax rate ~25%–26%
  • 2026 modest decrease in cash interest expected (lower rates offset higher average balances)

Operations & strategy

  • Focus on preneed funeral and cemetery sales growth (low to mid-single digits expected in 2026)
  • Manage fixed costs slightly below inflation via productivity improvements
  • SCI Direct conversion to insurance-funded offerings, boosting general agency revenue but pressuring near-term margins
  • Cemetery development creating new tiered customer options; emphasis on high-IRR projects
  • Leverage scale and disciplined capital deployment (reinvest, acquisitions, buybacks, dividends)

Market & outlook

  • 2026 funeral volumes expected flat to slightly down; average revenue per case to grow at inflationary rates, modestly offset by cremation mix
  • Funeral gross margin expected to expand 20–60 bps in 2026; cemetery gross margin 30–60 bps
  • Cemetery revenue growth expected 2%–5% in 2026; strong profit dollar growth targeted
  • Below-the-line 2026: net favorable EPS impact from lower share count, partly offset by higher interest expense and slightly higher tax rate
  • Longer term: return to normalized cash tax rate of ~24%–25% absent further tax planning

Risks & headwinds

  • Potential decline in funeral case volume and rising cremation mix pressuring average revenue growth
  • Lower general agency commission rate (stabilized in mid-30% range) vs. prior year and prior product mix
  • Margin pressure from shift to insurance-funded products replacing higher-margin merchandise revenue (SCI Direct)
  • Atneed cemetery revenue softness and variability in large property sales vs. tough comps
  • Slightly higher 2026 effective tax rate vs. 2025 and interest expense outlook (though partially offset)
  • Working capital and compensation accrual timing can affect quarter-to-quarter G&A and cash flow

Sentiment: positive

📊 Service Corporation International (SCI) — AI Scoring Summary

📊 AI Stock Rating — Summary

SCI reported quarterly revenue of $1.11 billion and net income of $263 million, translating to EPS of $1.88. The company achieved a net margin of approximately 23.7%. Free cash flow for the quarter was $177 million after capital expenditures of $74.86 million. Year-over-year trends suggest solid revenue growth, supported by consistent operating performance and modest profitability improvements. The balance sheet shows total assets at $18.65 billion against liabilities of $17.02 billion, reflecting equity of $1.64 billion with a net debt position of $4.90 billion. SCI's cash flow position remains robust, with positive operational cash flows supporting capital returns, including dividends and buybacks, which together amounted to a distribution of approximately $122 million in the past quarter. Valuation targets reflect a consensus price of $96.33, indicating stable analyst sentiment. Despite a relatively leveraged position, the company's consistent dividend policy and strategic buybacks enhance shareholder value, suggesting a balanced focus on growth and returns.

AI Score Breakdown

Revenue Growth — Score: 7/10

Revenue growth appears steady, with a solid performance in the most recent quarter, driven by core operations.

Profitability — Score: 8/10

Profit margins are strong at 23.7%, with EPS of $1.88 indicating efficient cost management.

Cash Flow Quality — Score: 8/10

Free cash flow of $177 million highlights strong liquidity; capital returns include significant buybacks and stable dividends.

Leverage & Balance Sheet — Score: 6/10

Net debt is high relative to equity, but asset base supports leverage. Financial resilience is moderate.

Shareholder Returns — Score: 7/10

Consistent dividend payments and share repurchases reflect a strong commitment to shareholder returns.

Analyst Sentiment & Valuation — Score: 7/10

Analyst targets suggest moderate upside. Current valuation metrics support a stable outlook.

⚠ AI-generated — informational only, not financial advice.

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