Estimates have been rising for
Service Corporation International
) after the company delivered better than expected first quarter
The company also recently announced a 20% increase in its quarterly
dividend. It currently yields a solid 2.1%.
Nothing is Certain but Death and Taxes
Service Corporation International is the largest provider of
deathcare products and services in North America. The company owned
and operated 1,419 funeral homes and 373 cemeteries in 43 states, 8
Canadian provinces and the District of Columbia as of March 31,
It is headquartered in Houston, Texas and has a market cap of $2.5
First Quarter Results
Service Corporation reported better than expected first quarter
results on April 25. Earnings per share came in at 20 cents,
beating the Zacks Consensus Estimate by 2 cents. It was an 18%
increase over the same quarter last year.
Revenues rose 4% to $602.5 million, slightly ahead of the consensus
of $602.0 million. This was driven by a 7% increase in "preneed"
funeral revenue as the average revenue per contract sold rose 3% to
Meanwhile, operating income increased 4% year-over-year.
Following solid first quarter results, analysts revised their
estimates higher for both 2012 and 2013, sending the stock to a
Zacks #2 Rank (Buy).
The Zacks Consensus Estimate for 2012 is now $0.72, representing
11% growth over 2011 EPS. The 2013 consensus is now $0.78,
corresponding with 8% EPS growth.
On May 9, Service Corporation announced a 20% increase in its
regular quarterly dividend to 6 cents per share. It currently
yields a solid 2.1%.
Valuation looks reasonable for Service Corporation with shares
trading at 15.1x 12-month forward earnings, a discount to its
10-year median of 15.7x.
And its price to cash flow ratio of 7.4 is a discount to the
industry median of 9.4.
The Bottom Line
With rising estimates, solid growth projections, a 2.1% yield and
reasonable valuation, Service Corporation International offers
investors a lot to like.
Todd Bunton is the Growth & Income Stock Strategist for
and Editor of the
Income Plus Investor service
SERVICE CORP IN (SCI): Free Stock Analysis
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