Service Corporation International (SCI) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Service Corporation International (SCI)

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Intrinsic Value (DCF)

Current$82.10
Intrinsic$49.42
-40%
$23.60$49.42$98.48
Market implies 21% growth for 5 years
Current price reflects execution expectations above 12% growth — not unreasonable for quality businesses.
At $82, the market prices in continued strong cash flow growth (21%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $24 → Bull $98. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →8%10%12%14%
8%$66$74$83$93
10%$37$43$49$56
12%$21$26$31$36
14%$11$15$19$23

Bull Case

  • Bull case ($98) offers 20% upside at 15% growth, 9% discount
  • Conservative 12% growth assumption is achievable based on track record

Bear Case

  • Bear case ($24) implies 71% downside at 10% growth, 12% discount
  • Price reflects 21% growth expectations vs 12% historical — high bar to clear
  • Trading 40% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$623.31M
Year 2$699.02M
Year 3$783.93M
Year 4$879.14M
Year 5$985.92M
Terminal$14.51B

📐 Model Inputs

Growth Rate12.1%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$555.80MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

Frequently Asked Questions

Is SCI stock undervalued or overvalued?
🔴 OVERVALUED

SCI trades at $82.10 vs. our DCF-derived intrinsic value of $49.42, implying -38% downside. Using a 10.0% WACC and 12.1% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($83.46) suggests limited upside.

What is SCI's intrinsic value?

Using a 5-year DCF model: Base FCF of $556M, projected at 12.1% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $4.70B net debt and dividing by 0.15B shares: Bear $24.88 | Base $49.42 | Bull $83.46. Current price $82.10 implies -38% to base case.

How is SCI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 12.1% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($11.95B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 21.5x.