SCI
SCI
Accumulate 2026-03-05
Model
DCF
Price at Report
$81.94
Base IV
$81.25
Bear IV
$47.73
Bull IV
$129.75
Entry Zone: 74-82 · Sell Above: 105
Bore Family Office
Valuation Report — Service Corporation International (SCI) • March 5, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 7.00% • Current Price: $81.94
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Service Corporation International is the largest provider of death care services in North America, operating ~1,900 funeral homes and ~500 cemeteries across the US, Canada, and Puerto Rico under the Dignity Memorial brand. Founded in Houston in 1962 by Robert L. Waltrip, SCI built an unassailable scale advantage through decades of acquisitions, capturing ~16% of the US funeral market. The business is economically recession-resistant: death is non-deferrable and local — once a family builds a relationship with a funeral home, they return. SCI's $7.3B preneed backlog (families who pre-purchased funeral plans) provides extraordinary forward revenue visibility. The company is a direct beneficiary of US demographic trends: 77 million Baby Boomers are entering peak mortality years, and annual US death volumes are expected to rise ~15% over the next decade through the early 2030s. Management has consistently returned capital through buybacks (share count down ~40% over the past decade) and a rising dividend.
📊 Financial Snapshot
| Metric | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|
| Revenue ($M) | $3,190 | $3,230 | $3,300 | $4,143 | $4,108 | $4,099 | $4,186 | $4,309 |
| EBITDA ($M) | $810 | $843 | $900 | $1,369 | $1,121 | $1,154 | $1,153 | $1,214 |
| Operating Income ($M) | — | — | — | — | — | — | — | — |
| Net Income ($M) | $447 | $369 | $450 | $802 | $565 | $537 | $518 | $542 |
| EPS (diluted) | $2.44 | $1.99 | $2.44 | $4.72 | $3.53 | $3.53 | $3.53 | $3.80 |
| Free Cash Flow ($M) | — | $266 | $310 | $531 | $436 | $507 | $555 | $553 |
| Annual DPS | $0.720 | $0.840 | $0.960 | $1.000 | $1.040 | $1.120 | $1.200 | $1.291 |
| Total Debt ($M) | $3,532 | $3,513 | $3,650 | $3,901 | $4,251 | $4,649 | $4,751 | $5,082 |
| Rev YoY Growth | — | +1.3% | +2.2% | +25.5% | -0.8% | -0.2% | +2.1% | +2.9% |
📈 DCF Scenarios
$48
🔴 Bear
$81
📊 Base
$130
🚀 Bull
$81.94
Current Price
$96
Analyst Avg PT
📋 Full 10-Year Projection Tables
Bear Scenario
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.57B | $0.53B | $0.53B |
| Year 2 | Stage 1 | $0.59B | $0.51B | $1.04B |
| Year 3 | Stage 1 | $0.60B | $0.49B | $1.54B |
| Year 4 | Stage 1 | $0.62B | $0.47B | $2.01B |
| Year 5 | Stage 1 | $0.64B | $0.46B | $2.47B |
| Year 6 | Stage 2 | $0.66B | $0.44B | $2.91B |
| Year 7 | Stage 2 | $0.67B | $0.42B | $3.33B |
| Year 8 | Stage 2 | $0.69B | $0.40B | $3.73B |
| Year 9 | Stage 2 | $0.71B | $0.38B | $4.11B |
| Year 10 | Stage 2 | $0.73B | $0.37B | $4.48B |
| Terminal | — | TV=$13.4B | PV(TV)=$6.8B (60% of EV) | EV=$11.3B |
Base Scenario
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.59B | $0.55B | $0.55B |
| Year 2 | Stage 1 | $0.63B | $0.55B | $1.11B |
| Year 3 | Stage 1 | $0.68B | $0.55B | $1.66B |
| Year 4 | Stage 1 | $0.72B | $0.55B | $2.21B |
| Year 5 | Stage 1 | $0.78B | $0.55B | $2.77B |
| Year 6 | Stage 2 | $0.81B | $0.54B | $3.31B |
| Year 7 | Stage 2 | $0.86B | $0.53B | $3.84B |
| Year 8 | Stage 2 | $0.90B | $0.52B | $4.36B |
| Year 9 | Stage 2 | $0.94B | $0.51B | $4.88B |
| Year 10 | Stage 2 | $0.99B | $0.50B | $5.38B |
| Terminal | — | TV=$20.2B | PV(TV)=$10.3B (66% of EV) | EV=$15.6B |
Bull Scenario
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.61B | $0.57B | $0.57B |
| Year 2 | Stage 1 | $0.68B | $0.60B | $1.17B |
| Year 3 | Stage 1 | $0.76B | $0.62B | $1.79B |
| Year 4 | Stage 1 | $0.84B | $0.64B | $2.43B |
| Year 5 | Stage 1 | $0.93B | $0.66B | $3.09B |
| Year 6 | Stage 2 | $1.00B | $0.67B | $3.76B |
| Year 7 | Stage 2 | $1.08B | $0.67B | $4.43B |
| Year 8 | Stage 2 | $1.16B | $0.67B | $5.10B |
| Year 9 | Stage 2 | $1.24B | $0.68B | $5.78B |
| Year 10 | Stage 2 | $1.34B | $0.68B | $6.46B |
| Terminal | — | TV=$30.5B | PV(TV)=$15.5B (71% of EV) | EV=$21.9B |
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.0% | $142 | $166 | $198 | $248 | $329 |
| 5.5% | $119 | $136 | $158 | $189 | $236 |
| 6.0% | $100 | $113 | $129 | $150 | $180 |
| 6.5% | $86 | $95 | $107 | $123 | $143 |
| 7.0% | $74 | $81 | $90 | $102 | $117 |
| 7.5% | $64 | $70 | $77 | $86 | $97 |
| 8.0% | $55 | $60 | $66 | $73 | $81 |
| 8.5% | $48 | $52 | $57 | $62 | $69 |
| 9.0% | $42 | $45 | $49 | $54 | $59 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
🏦 Comparable Valuation
| Company | Ticker | Rev Growth | EV/EBITDA | FCF Yield | Div Yield |
|---|---|---|---|---|---|
| Service Corp | SCI | +2.9% | ~13x | ~4.3% | 1.6% |
| Park Lawn | PLC | +8% | ~12x | ~3% | 1.5% |
| Hillenbrand | HI | ~5% | ~9x | ~5% | 2.8% |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $1.291 |
| Current Yield | 1.58% |
| Consecutive Growth Years | 7 |
| 1-yr DPS CAGR | +7.6% |
| 3-yr DPS CAGR | +5.9% |
| 5-yr DPS CAGR | +5.0% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 34.0% |
| FCF Payout Ratio | 30.0% |
| Sustainability Verdict | Safe |
Verdict: Safe. 34% payout on EPS; 30% on FCF. Extremely well covered. Management prioritizes buybacks + M&A alongside dividends.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $4.72 | — | — | — | Actual |
| 2022 | $3.53 | — | — | — | Actual |
| 2023 | $3.53 | — | — | — | Actual |
| 2024 | $3.53 | — | — | — | Actual |
| 2025 | $3.80 | — | — | — | Actual |
| 2026 | $4.12 | $4.25 | $4.45 | 8 | Estimate |
| 2027 | $4.49 | $4.69 | $4.97 | 8 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $4.1B | — | — | — | Actual |
| 2022 | $4.1B | — | — | — | Actual |
| 2023 | $4.1B | — | — | — | Actual |
| 2024 | $4.2B | — | — | — | Actual |
| 2025 | $4.3B | — | — | — | Actual |
| 2026 | $4.3B | $4.5B | $4.7B | 8 | Estimate |
| 2027 | $4.5B | $4.7B | $4.9B | 8 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $96.50 | Range $90–$110
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Tomohiko Sano | JP Morgan | Buy | $110 | +34.2% |
| A.J. Rice | UBS | Strong Buy | $95 | +15.9% |
| Scott Schneeberger | Oppenheimer | Buy | $91 | +11.1% |
| John Ransom | Raymond James | Buy | $90 | +9.8% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q1 2025 | $0.95 vs $0.91 | +$0.04 ✅ | $1.1B vs $1.1B | +$0.0B ✅ | In-line |
| Q2 2025 | $0.88 vs $0.85 | +$0.03 ✅ | $1.0B vs $1.0B | +$0.0B ✅ | Raised FY guide |
| Q3 2025 | $0.95 vs $0.91 | +$0.04 ✅ | $1.1B vs $1.1B | +$0.0B ✅ | Beat; death volume normalization |
| Q4 2025 | $1.02 vs $0.98 | +$0.04 ✅ | $1.1B vs $1.1B | +$0.0B ✅ | Strong preneed sales |
(e) Confidence Band Commentary
4 analysts; narrow PT range $90-$110. Low coverage typical for niche industry. JP Morgan initiated at $110 (Jan 2026) — bullish on Baby Boomer demographic tailwind. Consistent small EPS beats.
💡 Investment Thesis
🚀 Bull Case
- Baby Boomer tailwind: 77M Boomers entering peak mortality. Annual US deaths projected to rise ~15% through 2033. SCI owns the infrastructure.
- $7.3B preneed backlog: Essentially deferred revenue converting upon death — extraordinary visibility for a consumer business.
- Pricing power: Funeral costs consistently rise above CPI. SCI has delivered revenue growth in nearly every year despite volume normalization post-COVID.
- Capital return machine: Share count down ~40% in 10 years; 7-year dividend growth streak; FCF payout only 30%.
- JP Morgan initiated at $110 (Jan 2026): Strong Buy, highest PT — bullish on demographic inevitability.
🔴 Bear Case
- Post-COVID volume hangover: 2021 was abnormally high (~3.46M US deaths); normalization has compressed SCI revenues 2022-24.
- $5.1B net debt (~4.2x EBITDA): High leverage limits flexibility; sensitive to rate environment.
- Cremation shift: Cremation rates now ~60%+ and rising — generates ~40-50% less revenue per death than traditional burial.
- Thin coverage: 4 analysts creates potential liquidity discount and reduced institutional attention.
⚖️ DCF Verdict: Accumulate — Service Corporation International (SCI)
Current price: $81.94 | Analyst Avg PT: $96.50
$48
🔴 Bear
$81
📊 Base
$130
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$82 | Begin position |
| Tier 2 — Add | ≤$78 | Add on weakness |
| Tier 3 — Full | ≤$74 | Full allocation |
| Sell Alert | ≥$105 | Above fair value — consider trimming |
Accumulate at $81.94. SCI is the only investable pure-play on the most predictable demographic trend in America. Analyst consensus PT $96.50 (+17.8%); JP Morgan at $110 (+34%). Baby Boomer peak mortality wave begins ~2028 — build a position before the market prices it in. Starter at $82; add at $78; full position at $74. Sell above $105.
Bore Family Office • Analysis generated by Lurch • Not investment advice.