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Service Corp. (SCI) Soars 6.4%: Is Further Upside Left in the Stock?

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Service Corp. (SCI - Free Report) shares ended the last trading session 6.4% higher at $56.71. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 2.5% gain over the past four weeks.

Service Corporation’s shares got a boost from robust first-quarter 2021 results, wherein both top and the bottom lines increased year over year and surpassed the respective Zacks Consensus Estimate. Moreover, management raised its bottom-line view for 2021, and now envisions adjusted earnings per share in the range of $2.70-$3.00 compared with $2.50-$2.90 projected earlier.

Quarterly results benefited from increased mortality due to the coronavirus pandemic, which led to higher funeral services performed as well as increased burials in the company’s cemeteries. Additionally, Service Corporation has been gaining on a solid cost structure, which drove margin enhancements in the funeral and cemetery segments during the quarter under review.  Apart from this, the company is on track with its long-term earnings growth framework. Accordingly, it will maintain focus on its core strategies that include growing revenues by remaining relevant to client families, leveraging scale and maximizing capital deployment opportunities.

Price and Consensus

Price Consensus Chart for SCI

This funeral home and cemetery operator is expected to post quarterly earnings of $0.67 per share in its upcoming report, which represents a year-over-year change of +15.5%. Revenues are expected to be $837.65 million, up 2.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Service Corp., the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SCI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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