3 Reasons to Avoid SCI and 1 Stock to Buy Instead

Since July 2025, Service International has been in a holding pattern, posting a small loss of 2.9% while floating around $79.48. The stock also fell short of the S&P 500’s 10.8% gain during that period.

Is there a buying opportunity in Service International, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free for active Edge members.

Why Do We Think Service International Will Underperform?

We're cautious about Service International. Here are three reasons we avoid SCI and a stock we'd rather own.

1. Inability to Grow Funeral Services Performed Points to Weak Demand

Revenue growth can be broken down into changes in price and volume (for companies like Service International, our preferred volume metric is funeral services performed). While both are important, the latter is the most critical to analyze because prices have a ceiling.

Over the last two years, Service International failed to grow its funeral services performed, which came in at 84,636 in the latest quarter. This performance was underwhelming and implies there may be increasing competition or market saturation. It also suggests Service International might have to lower prices or invest in product improvements to accelerate growth, factors that can hinder near-term profitability.

2. Mediocre Free Cash Flow Margin Limits Reinvestment Potential

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Service International has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 14.3%, lousy for a consumer discretionary business.

3. New Investments Fail to Bear Fruit as ROIC Declines

A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Service International’s ROIC averaged 4.4 percentage point decreases each year. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Final Judgment

We see the value of companies helping consumers, but in the case of Service International, we’re out. With its shares lagging the market recently, the stock trades at 19× forward P/E (or $79.48 per share). This multiple tells us a lot of good news is priced in - we think there are better stocks to buy right now. Let us point you toward the Amazon and PayPal of Latin America.

Stocks We Would Buy Instead of Service International

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The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.