BY: SAEED AL DHAHERI
CONSUMER
DISCRETIONARY
SERVICE CORPORATION
INTENTIONAL
CONSUMER DISCRETIONARY RECAP
Definition :
•  Businesses that sell non-essential goods and
services.
Such As:
•
•
•
•
•
Retailers
Media
Consumer services
Consumer Durables and Apparel
Automobiles and components •  Very Cyclical ( attend to perform with economy)
2
investopedia.com
PERFORMANCE
²  Underperformancined relative to other sectors and the S&P 500
3
RECAP RECOMMENDATION
² The sector is underweighted in SIM portfolio (77)
basis point
² Underperform the S&P 500 for the last year
² The Economy need sometime after the recession, it
would recover after awhile
Final recommendation:
² Hold some for the recovery which is not very far
and the same time sell to some in SIM
STOCKS IN SIM FOR CONS. DISCR.
SCI OVERVIEW
² leading provider of death care products and
services in North America.
² Founded in 1962
²  headquartered in Houston, Texas
² owns and operates more than 1,400 funeral homes
and 370 Cemeteries in 43 states, eight Canadian
provinces, Washington, DC, and Puerto Rico
BASIC DATA
Market Data
Financial Data
Market Cap
4.50B
Revenue
2.56B
Shares
213.53M
Revenue
Growth
6.10%
Dividend Yield
1.60%
Gross Margin
21.5%
Dividend
0.32
Operating
Margin
16.23%
Beta
0.86
P/E
35.85
52 Week Price
Range
$16.81-$21.10
EPS
0.59
STOCK PRICE FOR 1 YEAR
BUSINESS DRIVERS
² Drivers
²  Aging U.S. Population
²  Recovery Economies
²  Expanding through acquisition and organic growth
² Risks
²  Insider trading Alert
²  Uncertainty of Economies
COMPETITOR ANALYSIS
FY 13
SCI
MATW
CSV
HI
Industry
Revenue
Growth
6.10%
9.40%
7.3%
58%
10.17%
EBITDA
Margin
23.00%
13.6%
23%
13.36%
20.1%
ROE
9%
9.71%
10.6%
16.1%
28.47%
Current ratio
0.6
2.2
0.8
1.4
1.3
Debt/Assets
25.6%
30.8%
33.4%
33.2%
38%
MULTIPLE VALUATION
P/E
P/B
P/S
P/CF
P/EBITDA
SCI
20.76
42.80
1.51
11.09
6.89
S&P 500
17.27
2.62
1.62
9.33
8.69
Cons. Disc
35.92
4.12
1.30
12.68
9.00
Industry
29.02
4.50
2.40
20.22
7.00
Relative to
S&P 500
1.20
16.34
0.93
1.18
0.80
Relative to
Cons. Disc
1.03
10.38
1.16
0.87
0.77
Relative to
Industry
0.72
9.51
0.63
0.55
0.99
MULTIPLE VALUATION
Current
Multiple
(SCI)
MATW
CSV
HI
STEI
DTY
LN
Target
Multiple
Target
Price
P/E
23.01
17.58
26.87
21.5
23.93
17.87
21.69
19.87
P/S
1.68
1.19
1.42
1.25
2.13
2.82
2.01
25.20
P/B
3.11
2.05
1.88
3.34
2.48
17.65
5.17
33.07
Average Target Price
26.05
% change from current
prices
13.12%
RECOMMENDATIONS
RECOMMENDATION
DCF Target Price
Multiple Target
Price
Weighted
Average Price
SCI is a BUY
Target Price
Potential
Weight
21.59
6.7%
70%
$26.05
13.12%
30%
22.93
8.62
100%
STOCK TO SELL
•
•
•
•
Abercrombie & Fitch Co.
45% decrease
Lost its value from SIM 9.05%
Sell 131 bps
•
•
•
•
Tumi
22% decrease
Lost its value from SIM 21.5%
Sell 131 bps
STOCK TO BUY
² Direct TV
² 49% increase
² Buy 200 bps
² Comcast
² 28% increase
² Buy 171bps
² SCI
² 15% Increase
² Buy 115 bps