SCI
Service Corporation International
$77.39
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 20.5% above fair value
You pay
$77.39
Bear
$51.36
Fair
$64.20
Bull
$77.04
Bear
$51.36
-33.6%
$3.80 × 12x P/E
Fair
$64.20
-17.0%
$3.80 × 15x P/E
Bull
$77.04
-0.5%
$3.80 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
20.4x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $93.00 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $64.20 per share.
Warnings
Dividend-based valuation: $185.63 (above our primary estimate by 226%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $93.00 (from 10 analysts). Our estimate is 39% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples