From the stock market to the political world, this past year has demonstrated the folly of plenty of old maxims. Still, credit crisis or not, there’s nothing more reliable than death.
So it was a little surprising to see today Service Corporation International (SCI) warn of falling profits. SCI is the biggest funeral and cemetery company in the world. It owns 1,300 funeral homes and 350 cemeteries.
Death may be inevitable, but the death business apparently hasn’t matched the reliability of other consumer staples like cereal (Kellogg) and shampoo (Procter & Gamble).
SCI lowered fourth quarter earnings guidance, blaming the decline on weaker pre-need cemetery sales and lower income from trust funds. The stock plunged 13% on Feb. 9 to a share price of 4.25, and all told shares are off 63% in the past 12 months.
A heavy debt load seems to be a problem for SCI. And, Raymond James (RJF) analyst John Ransom sees the firm’s recurring free cash flow plunging, from $252 million in 2007 to an estimated $184 million in 2009.
However, Ransom reiterated his “strong buy” rating on the stock, citing its “attractive valuation.”