Zacks Investment Ideas feature highlights: Service Corp., Stewart Enterprises and the Ensign Group

Zacks Investment Ideas feature highlights: Service Corp., Stewart Enterprises
                             and the Ensign Group

PR Newswire

CHICAGO, Nov. 13, 2012

CHICAGO, Nov. 13, 2012 /PRNewswire/ --Today, Zacks Investment Ideas feature
highlights Features: Service Corp (SCI), Stewart Enterprises (NYSE: STEI), The
Ensign Group (NYSE: ENSG)

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Don't Get Buried, Be Prepared

I recently had the pleasure of celebrating the 100th birthday of my
Grandmother back home in Cleveland, OH. She has been in a care facility for
the last 8 years and that has dramatically improved her health and probably
extended her life. This all made me think of the relative future, and the
aging baby boomer population.

Just prior to leaving for home, I was informed by my coworker @TraceyRyniec
that there was an start up dot com business from Cleveland that was getting
press in another publication. After being on the site for just a few moments,
a IM message was asking me if I needed help... I was looking to meet up with
the founder and low and behold it was one of them on the IM. We set up a time
to talk when I was home.

eFuneral, based in Cleveland OH is providing a service to people that are
really struggling at the time. Loss of family or a friend is rarely if ever
fully expected, so pulling it all together to arrange a funeral and all that
comes with it can be difficult. Prepping for it can make the process much
easier, especially to those of us who do not want to waste time and money.

Over coffee I spoke with Mike Belsito and we talked about start ups and I
shared some experiences from when I was working for a private equity firm
investing in dot coms. Mike shared some of this marketing ideas with me and I
heard a few normally highly Zacks Ranked Companies.

Funeral Services

Service Corp (SCI) was one of the names that jumped right to mind. As a Zacks
#2 Rank (Buy) stock, we know that the earnings estimates are going to be
trending higher. I also see that the company has a great history of beating
the number and providing a positive earnings surprise. In fact, the company
has 7 beats in its last 8 reports and the other report was an earnings meet.

Estimates for SCI have been moving higher over the last year. The Zacks 2012
earnings estimate climbed 10% throughout the year, moving from $0.70 in
January to the current level of $0.77. The 2013 estimate has risen from $0.76
to $0.82 over the same time period.

being the 800 lb. gorilla in the space its valuation metrics tend to skew the
industry average. The stock is trading at 18x trailing twelve months earnings,
which is higher than the 16x industry average. The forward PE is also showing
a slight premium to the industry average. Where things tend to level off, is
the more conservative measure of price to book (2.1x for SCI vs 3.8x industry
average) and price to sales (1.2x for both SCI and the industry average).

Stewart Enterprises

Another funeral service provider is Zacks #3 Rank (Hold) Stewart Enterprises
(STEI). This stock has slipped to a #3 recently, but has held a #1 (Strong
Buy) or a #2 (Buy) rank throughout most of the year.

The company has topped the Zacks Consensus Estimate in each of the last two
quarters posting beats of 44% and 22%. Prior to those beats the company had
missed in each of the last four quarters.

Estimates have moved around quite a bit for 2012. The year started with a
$0.43 estimate and number had slid to $0.39 in May, but has since recovered to
the current level of $0.44. The picture for 2013 was much better, with
estimates starting the year at $0.48 and moved to $0.49 in May and currently
stand at $0.51.

STEI trades mostly in line with the industry averages. The 16.6x trailing PE
is slightly higher than the 16x industry average while the forward PE of 14x
is at a slight discount to the 14.6x industry average. Price to book of 1.4x
is well below the 3.8x industry average and like SCI, STEI trades in line with
the industry average for price to sales at 1.2x

Both of these companies could see margin pressure from the likes of eFuneral
or other information providers. eFuneral surveyed over 1,000 funeral homes in
11 different metropolitan markets throughout the US. Based on that research,
they have created the eFuneral Price Index to act as a market specific guide
on funeral costs in that market. Over a dozen line item costs are covered —
along with averages and ranges. You can find the report on the eFuneral
website (
http://efuneral.com/efuneral-price-index-reports-released-to-better-understand-funeral-costs/
).

Long Term Care

Another name that Mike talked about marketing to, hoping to help prepare
families for the inevitable was in the longer term care space. The Ensign
Group (ENSG) falls into that space and currently carries a Zacks #2 (Buy)
rank. eFuneral is not seen as a competitor to ENSG, but looks to get some
potential clients from long term care providers.

Its recent earnings report was a beat, and while it was a positive earnings
surprise, investors were not really stunned by that development. It marked the
11th straight positive earnings surprise by the company, but since the
surprise was only a penny, or 1.6% compared to the previous quarter which saw
an $0.08 or 13.5% surprise, the stock fell 5% in the session following the
release.

Estimates have moved higher for ENSG throughout the year, starting at $2.15
and rising to $2.51 at the current time for 2012. The same could be said of
2013, with estimates moving from $2.34 to $2.69.

The valuation picture for ENSG is a good one, with the company trading at
attractive levels. The trailing PE of 11.4x is lower than the 12.9x industry
average, and the forward PE carries a similar discount. The price to book
multiple of 1.8x is in line with the industry average. The price to sales
multiple of 0.7x is the only indication of a premium valuation, as the
industry average is a low 0.4x.

Being prepared for the inevitable is my Mom's job for my Grandmother. But I
can help my mother with eFuneral. No doubt that as the site grows and offers
new services it will be even more useful to millions of people.

In that same vein, being a prepared investor can help prevent massive losses
by following the Zacks Rank and paying close attention to where the
competition is coming from.

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