Sci Growth Strategy till 1980

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Current Strategy and Way Forward

SCI’s current growth strategy to grow using its cluster strategy both in domestic and international market has been successful so far. In the long run SCI’s international acquisition strategy will make the business sustainable in the long run.

The International Acquisitions resulted in 13% revenue growth compared to just 4% expenses growth from Australia. In United Kingdom the Revenue growth was 6% and compared to 1% expenses growth. Clearly indicating the value added by these acquisitions on SCI’s share prices.

However, having said that, I believe SCI should focus on its domestic market at the moment owing to the huge debt piling on it. It was estimated that without acquisitions their earnings per share could still grow by 12% per year. If it continues to do fill-in acquisitions in North America it would be able to capture more than 8% of the death care industry in North America. Even though The industry is now consolidated, and offers a natural growth potential of 1%.

So far SCI has been able to maintain its debt-to-total capitalization ratio of approximately 50%, which it should continue to do so.

The second biggest Funeral home in North America is The Loewen Group and third is Stewart Enterprises. Even though Loewen would be more lucrative for the business as it has better gross profits and operating profit, we should go with Stewart Enterprises considering our current debt of $1.4 billion. The long term debt of Stewart is lesser than that of Loewen and its EPS is higher.

Analysis of SCI’s financial statements shows us that if the company were to use its cash reserves to clear its short term debt,

After analyzing SCI’s financial statements, I come to a conclusion that SCI should obtain a controlling stake at Stewart Enterprises using its cash reserves of $38 million after clearing its short term debt. It could use a cash plus debt financial deal to acquire Stewart Enterprise.