Is Service Corporation International (SCI) positioned for future growth?

Service Corporation International (NYSE: SCI) stock fell -2.60% on Friday to $64.78 against a previous-day closing price of $66.51. With 2.29 million shares changed hands, the volume of the stock remained heavier than its average volume of 0.98 million shares. During the session, the Personal Services company that operates in wider Consumer Cyclical sector, reached to the highest price of $66.79 whereas the lowest price it dropped to was $64.41. The 52-week range on SCI shows that it touched its highest point at $75.11 and its lowest point at $57.27 during that stretch. It currently has a 1-year price target of $80.50. With its current market cap of 10.18 billion, SCI has annualized dividend of $1.00 while the current yield stands at 1.54%. Beta for the stock currently stands at 0.71.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of SCI was down-trending over the past week, with a drop of -12.71%, but this was down by -7.56% over a month. Three-month performance dropped to -9.66% while six-month performance rose 2.73%. The stock gained 2.13% in the past year, while it has lost -8.75% so far this year. A look at the trailing 12-month EPS for SCI yields 4.73 with Next year EPS estimates of 3.47. For the next quarter, that number is 0.82. This implies an EPS growth rate of 63.80% for this year and -1.42% for next year. EPS is expected to grow by 12.00% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 39.20%.

Float and Shares Shorts:

At present, 161.33 million SCI shares are outstanding with a float of 154.18 million shares on hand for trading. On Jul 14, 2022, short shares totaled 4.15 million, which was 2.62% higher than short shares on Jun 14, 2022. In addition to Mr. Thomas Luke Ryan as the firm’s Chairman, Pres & CEO, Mr. Eric D. Tanzberger serves as its Sr. VP & CFO.

Institutional Ownership:

Through their ownership of 87.03% of SCI’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 5.80% of SCI, in contrast to 46.14% held by mutual funds. Shares owned by individuals account for 40.18%. As the largest shareholder in SCI with 10.49% of the stake, Baillie Gifford & Co. holds 16,655,846 shares worth 16,655,846. A second-largest stockholder of SCI, The Vanguard Group, Inc., holds 15,946,255 shares, controlling over 10.05% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in SCI, holding 13,143,064 shares or 8.28% stake. With a 2.89% stake in SCI, the iShares Core S&P Mid Cap ETF is the largest stakeholder. A total of 4,580,003 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.80% of SCI stock, is the second-largest Mutual Fund holder. It holds 4,447,591 shares valued at 307.42 million. Vanguard Small Cap Index Fund holds 2.40% of the stake in SCI, owning 3,810,915 shares worth 263.41 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for SCI since 4 analysts follow the stock currently. There are 3 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 0 believe that the stock is worth HOLDING, 1 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With SCI analysts setting a high price target of $85.00 and a low target of $74.00, the average target price over the next 12 months is $80.50. Based on these targets, SCI could surge 31.21% to reach the target high and rise by 14.23% to reach the target low. Reaching the average price target will result in a growth of 24.27% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. SCI will report FY 2022 earnings on 02/13/2023. Analysts have provided yearly estimates in a range of $3.57 being high and $3.30 being low. For SCI, this leads to a yearly average estimate of $3.47. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Service Corporation International surprised analysts by $0.02 when it reported $0.84 EPS against a consensus estimate of $0.82. The surprise factor in the prior quarter was $0.37. Based on analyst estimates, the high estimate for the next quarter is $0.70 and the low estimate is $0.42. The average estimate for the next quarter is thus $0.55.

Summary of Insider Activity:

Insiders traded SCI stock several times over the past three months with 13 Buys and 14 Sells. In these transactions, 339,300 shares were bought while 341,913 shares were sold. The number of buy transactions has increased to 45 while that of sell transactions has risen to 46 over the past year. The total number of shares bought during that period was 863,762 while 874,872 shares were sold.

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