In This Article:
Let's talk about the popular Service Corporation International (NYSE:SCI). The company's shares received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$80.56 at one point, and dropping to the lows of US$71.53. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Service Corporation International's current trading price of US$76.23 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Service Corporation International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Service Corporation International
Is Service Corporation International Still Cheap?
According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Service Corporation International’s ratio of 21.59x is trading slightly above its industry peers’ ratio of 20.12x, which means if you buy Service Corporation International today, you’d be paying a relatively reasonable price for it. And if you believe Service Corporation International should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. In addition to this, it seems like Service Corporation International’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Service Corporation International look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Service Corporation International's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.