SCI – Market expectations are for Uniform ROA to improve, and management is confident about funeral segment growth, demand, and efficiency

April 26, 2022

  • Service Corporation International (SCI) currently trades above corporate and historical averages relative to Uniform earnings, with a 40.3x Uniform P/E (Fwd. V/E’).
  • At these levels, markets are pricing in expectations for Uniform ROA to improve to 8%, accompanied by 5% Uniform asset growth.
  • Meanwhile, analysts expect Uniform ROA to fade to 5% in 2023, accompanied by immaterial Uniform asset growth.
  • If sustained going forward, these levels would imply significant potential equity downside for the firm.
  • That said, the firm’s most recent earnings call suggests management is confident about funeral segment growth, demand, and efficiency.

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