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Service Corporation Benefits From Higher Coronavirus-led Demand
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Service Corporation International (SCI - Free Report) appears to be in a good shape. The company has lately been seeing a rise in revenues as increased funerals are being performed due to higher pandemic-led deaths. Apart from this, the inevitability of death keeps demand for products and services of companies like Service Corporation fairly stable. Notably, this deathcare services provider remains focused on strengthening its business through expansion and acquisition of funeral homes and the development of cemetery property to generate greater revenues. Let’s delve deeper.
Increased Pandemic-Led Deaths
The company has been gaining from increased funerals performed due to the coronavirus pandemic, which along with strong cost management aided its performance in second-quarter 2020. During the quarter, both earnings and revenues improved year over year and surpassed the Zacks Consensus Estimate. The bottom line was backed by increased gross profit, stemming from greater funeral services performed in the core funeral services business on account of the pandemic, and solid cost management. Management stated that it saw a better-than-anticipated operating performance in its funeral and cemetery operations. Increased funeral and cemetery revenues aided the top line. Management expects continued effects of the pandemic to lead to higher funeral services performed, especially in the early third quarter.
Other Factors Working Well for Service Corporation
While the funeral services industry is unpleasant by nature, the inevitability of death keeps demand for its services intact, in general. Thus, high mortality rates and an aging baby boomer population bode well for industry players like Service Corporation, Hillenbrand (HI - Free Report) , Matthews International (MATW - Free Report) and Carriage Services (CSV - Free Report) . Service Corporation remains committed to pursuing strategic buyouts for both its segments and building new funeral homes to generate greater returns.
During the second quarter, the company incurred capital expenditures of $52.6 million. These were directed toward capital enhancements at currently operating locations, development of cemetery property and expenditures for construction of new funeral service locations. These investments are touted to be accretive to the company in the near term. Management remains focused on seeking acquisition opportunities. Moreover, the company anticipates spending capital on new funeral homes and expansion opportunities to increase its footprint. In 2020, expenditures associated with capital enhancements at current locations and cemetery development are anticipated in a band of $165-$195 million.
Wrapping Up
Though Service Corporation is seeing increased pandemic-led revenues, its preneed sales are being adversely impacted by higher stay-at-home and social-distancing orders. Apart from this, a decline in funeral average per case due to bans on big gatherings is a hurdle. Escalated costs associated with COVID-19 are also concerning. Nevertheless, Service Corporation’s tight expense control measures, together with the aforementioned upsides, are likely to help it counter the challenges.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Service Corporation Benefits From Higher Coronavirus-led Demand
Service Corporation International (SCI - Free Report) appears to be in a good shape. The company has lately been seeing a rise in revenues as increased funerals are being performed due to higher pandemic-led deaths. Apart from this, the inevitability of death keeps demand for products and services of companies like Service Corporation fairly stable. Notably, this deathcare services provider remains focused on strengthening its business through expansion and acquisition of funeral homes and the development of cemetery property to generate greater revenues. Let’s delve deeper.
Increased Pandemic-Led Deaths
The company has been gaining from increased funerals performed due to the coronavirus pandemic, which along with strong cost management aided its performance in second-quarter 2020. During the quarter, both earnings and revenues improved year over year and surpassed the Zacks Consensus Estimate. The bottom line was backed by increased gross profit, stemming from greater funeral services performed in the core funeral services business on account of the pandemic, and solid cost management. Management stated that it saw a better-than-anticipated operating performance in its funeral and cemetery operations. Increased funeral and cemetery revenues aided the top line. Management expects continued effects of the pandemic to lead to higher funeral services performed, especially in the early third quarter.
Other Factors Working Well for Service Corporation
While the funeral services industry is unpleasant by nature, the inevitability of death keeps demand for its services intact, in general. Thus, high mortality rates and an aging baby boomer population bode well for industry players like Service Corporation, Hillenbrand (HI - Free Report) , Matthews International (MATW - Free Report) and Carriage Services (CSV - Free Report) . Service Corporation remains committed to pursuing strategic buyouts for both its segments and building new funeral homes to generate greater returns.
During the second quarter, the company incurred capital expenditures of $52.6 million. These were directed toward capital enhancements at currently operating locations, development of cemetery property and expenditures for construction of new funeral service locations. These investments are touted to be accretive to the company in the near term. Management remains focused on seeking acquisition opportunities. Moreover, the company anticipates spending capital on new funeral homes and expansion opportunities to increase its footprint. In 2020, expenditures associated with capital enhancements at current locations and cemetery development are anticipated in a band of $165-$195 million.
Wrapping Up
Though Service Corporation is seeing increased pandemic-led revenues, its preneed sales are being adversely impacted by higher stay-at-home and social-distancing orders. Apart from this, a decline in funeral average per case due to bans on big gatherings is a hurdle. Escalated costs associated with COVID-19 are also concerning. Nevertheless, Service Corporation’s tight expense control measures, together with the aforementioned upsides, are likely to help it counter the challenges.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>