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Here's Why Service Corporation (SCI) Appears to be in Solid Shape
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Service Corporation International (SCI - Free Report) is in robust shape, with its shares up 33.6% in the past six months compared with the industry’s growth of 21.8%. The company has been benefiting from strength in the cemetery segment, along with solid cost control. This was witnessed in second-quarter 2021, wherein both top and bottom lines increased year over year and cruised past the Zacks Consensus Estimate as well. A robust second-quarter show encouraged management to pull up its full-year bottom-line view.
The Zacks Consensus Estimate for 2021 has moved up 16.3% to $3.36 per share over the past 30 days. Apart from the above-mentioned factors, this Zacks Rank #2 (Buy) company has been gaining on its focus on expansion. Let’s delve deeper.
Service Corporation International Price, Consensus and EPS Surprise
Constant strength in comparable preneed cemetery sales production as well as growth in comparable preneed funeral sales production drove second-quarter results. The company posted adjusted earnings of 92 cents per share, which easily surpassed the Zacks Consensus Estimate of 66 cents and increased 58.6% year over year. This year-over-year growth can be attributed to the elevated gross profit associated with a robust increase in cemetery-recognized preneed revenues. Further, the bottom line gained from reduced shares outstanding, lower interest expenses, a decline in the adjusted effective tax rate, and decreased corporate and general administrative expenses. Total revenues of $987.5 million advanced 20.4% (or $168 million) year over year, backed by increased funeral and cemetery revenues. The figure came in ahead of the Zacks Consensus Estimate of $837 million.
Management is encouraged with the continued strength in preneed cemetery property sales, which is likely to stay sturdy throughout 2021, together with robust funeral results. The company now envisions adjusted earnings per share in the range of $3.20-$3.50 compared with $2.70-$3.00 projected earlier.
Image Source: Zacks Investment Research
Cemetery Segment Strength
Revenues in the segment have been increasing for the past few quarters. During the second quarter of 2021, the top-line figure rose 34.4% to $455.8 million, thanks to increased core revenues. Core revenues gained from an increase in both at need and total recognized preneed revenues. Comparable Cemetery revenues climbed 34.4% year over year on the back of higher core revenues. This, in turn, was fueled by elevated recognized preneed revenues owing to solid comparable preneed cemetery property sales production. Moreover, growth in atneed revenues, which stemmed from a rise in burials performed, was an upside.
Comparable preneed cemetery sales production ascended 35.6% on growth in large sales activity, sales averages and sales velocity. The company continued to gain from an efficient sales force, prudent utilization of customer relationship management system and improved conversion rates from direct mail and digital lead campaigns. Additionally, Service Corporation continued to witness elevated conversion and close rates, thanks to customers’ greater awareness of the possible impact of coronavirus. Solid revenues also fueled segmental gross profit and margin.
Capital Expansions Aid
Service Corporation remains committed to pursuing strategic buyouts for both its segments and building new funeral homes to generate greater returns. In second-quarter 2021, the company incurred capital expenditures of $60.9 million. It undertook several cemetery development and construction projects. These investments are touted to be accretive to the company in the near term. Expenditures associated with capital enhancements at current locations and cemetery developments are anticipated in the band of $235-$255 million, in 2021.
We believe such upsides are likely to help Service Corporation keep its growth story going.
Image: Bigstock
Here's Why Service Corporation (SCI) Appears to be in Solid Shape
Service Corporation International (SCI - Free Report) is in robust shape, with its shares up 33.6% in the past six months compared with the industry’s growth of 21.8%. The company has been benefiting from strength in the cemetery segment, along with solid cost control. This was witnessed in second-quarter 2021, wherein both top and bottom lines increased year over year and cruised past the Zacks Consensus Estimate as well. A robust second-quarter show encouraged management to pull up its full-year bottom-line view.
The Zacks Consensus Estimate for 2021 has moved up 16.3% to $3.36 per share over the past 30 days. Apart from the above-mentioned factors, this Zacks Rank #2 (Buy) company has been gaining on its focus on expansion. Let’s delve deeper.
Service Corporation International Price, Consensus and EPS Surprise
Service Corporation International price-consensus-eps-surprise-chart | Service Corporation International Quote
Solid Q2 & Guidance
Constant strength in comparable preneed cemetery sales production as well as growth in comparable preneed funeral sales production drove second-quarter results. The company posted adjusted earnings of 92 cents per share, which easily surpassed the Zacks Consensus Estimate of 66 cents and increased 58.6% year over year. This year-over-year growth can be attributed to the elevated gross profit associated with a robust increase in cemetery-recognized preneed revenues. Further, the bottom line gained from reduced shares outstanding, lower interest expenses, a decline in the adjusted effective tax rate, and decreased corporate and general administrative expenses. Total revenues of $987.5 million advanced 20.4% (or $168 million) year over year, backed by increased funeral and cemetery revenues. The figure came in ahead of the Zacks Consensus Estimate of $837 million.
Management is encouraged with the continued strength in preneed cemetery property sales, which is likely to stay sturdy throughout 2021, together with robust funeral results. The company now envisions adjusted earnings per share in the range of $3.20-$3.50 compared with $2.70-$3.00 projected earlier.
Image Source: Zacks Investment Research
Cemetery Segment Strength
Revenues in the segment have been increasing for the past few quarters. During the second quarter of 2021, the top-line figure rose 34.4% to $455.8 million, thanks to increased core revenues. Core revenues gained from an increase in both at need and total recognized preneed revenues. Comparable Cemetery revenues climbed 34.4% year over year on the back of higher core revenues. This, in turn, was fueled by elevated recognized preneed revenues owing to solid comparable preneed cemetery property sales production. Moreover, growth in atneed revenues, which stemmed from a rise in burials performed, was an upside.
Comparable preneed cemetery sales production ascended 35.6% on growth in large sales activity, sales averages and sales velocity. The company continued to gain from an efficient sales force, prudent utilization of customer relationship management system and improved conversion rates from direct mail and digital lead campaigns. Additionally, Service Corporation continued to witness elevated conversion and close rates, thanks to customers’ greater awareness of the possible impact of coronavirus. Solid revenues also fueled segmental gross profit and margin.
Capital Expansions Aid
Service Corporation remains committed to pursuing strategic buyouts for both its segments and building new funeral homes to generate greater returns. In second-quarter 2021, the company incurred capital expenditures of $60.9 million. It undertook several cemetery development and construction projects. These investments are touted to be accretive to the company in the near term. Expenditures associated with capital enhancements at current locations and cemetery developments are anticipated in the band of $235-$255 million, in 2021.
We believe such upsides are likely to help Service Corporation keep its growth story going.
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Carriage Services (CSV - Free Report) ), currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 34.3%, on average.
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