Service Corporation International delivered a post-earnings pop on Tuesday, closing at $84.98 after a 10% weekly gain — a sharp reversal from the two prior quarters when the stock fell sharply after each print.
The options market called this one correctly. The earlier note flagged a decisively call-heavy setup, with the put/call ratio running at 0.37 — well below the 20-day average of 0.42 — and that bullish tilt has now been rewarded. The PCR remained near 0.37 through the close on July 28, essentially unchanged from before the event, suggesting options traders have not rushed to unwind hedges or rebuild put protection after the move. The earnings history makes the relief rally meaningful: the last two prints generated 1-day declines of 7.7% and 6.2% respectively, so a break from that pattern carries real psychological weight for holders.
Short positioning tells a consistent story. Bears have been unwinding steadily through the week, with SI as a percentage of the free float dropping to 5.1% from roughly 5.8% a week ago — a 7% reduction in one week. The month-long picture is more nuanced: shorts had been building through mid-July, reaching a local peak near 5.6% on July 10, before reversing sharply. That mid-July build — which the prior note flagged — now looks like pre-earnings positioning that failed to pay off. Borrow conditions offer no support for a new bear thesis: cost to borrow is negligible at 0.54%, and availability is deep in comfortable territory at 540%, meaning the lending pool is far from exhausted relative to the shares actually borrowed.
The Street had been cautious but constructive heading in. The most recent analyst actions — both from early May — saw UBS trim its target slightly to $93 while holding Buy, and JP Morgan cut from $110 to $100 while keeping Overweight. Those moves came after the April earnings disappointment; both firms appear to have been trimming for downside risk that did not materialise this quarter. The consensus mean target of $96.33 now sits roughly 13% above the current price of $84.98, a gap that could narrow if Q2 details hold up on the conference call. Valuation has re-rated modestly with the move: the P/E has expanded to roughly 19.4x, up about 1.8 turns over 30 days, and EV/EBITDA has crept to 12.0x — elevated but not stretched for a business with recurring revenue characteristics.
The institutional picture adds some constructive texture. T. Rowe Price added over 1.8 million shares in the most recent reported quarter through June, making it the most aggressive buyer among top holders. Invesco also added meaningfully — over 3.2 million shares — to join the top-ten. BlackRock added incrementally. Against that, Baillie Gifford held flat and Select Equity was unchanged. The institutional flow, taken together, leans toward accumulation rather than distribution at these levels.
The ORTEX short score has drifted to 47.6 from a recent high near 49.5 two weeks ago, reflecting the partial short unwind and loosening borrow conditions. The direction of that score — easing — is consistent with reduced bear conviction post-earnings. What to watch now is whether the short base, which remains just above 5% of the float with a days-to-cover of 6.7, continues to deflate as longs press their advantage, or whether any Q2 guidance disappointment on the call prompts shorts to rebuild into a stock that has already priced in a meaningful recovery.
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