Service Corporation International (SCI Quick QuoteSCI - Free Report) is scheduled to report third-quarter 2018 results on Oct 29, after market close. In the last reported quarter, the company delivered a positive earnings surprise of 2.3%.

 

 

After registering a bottom-line increase of 25.7% in the second quarter of 2018, Service Corporation is expected to record year-over-year growth in the third quarter as well. This is quite evident from the Zacks Consensus Estimate for the quarter under review, which is pegged at 36 cents compared with 33 cents reported in the year-ago quarter. Notably, the Zacks Consensus Estimate has remained unchanged in the past 30 days.

 

The Zacks Consensus Estimate for revenues of $762.2 million indicates an increase of 4.2% from the year-ago quarter. We note that total revenues of this Texas-based company rose almost 3% in the last reported quarter.

 

Let’s delve deeper and find out the factors impacting the results.

 

 

 

Service Corporation is gaining from its strategic growth efforts, which are aimed at driving revenues, utilizing scale and deploying capital, efficiently. The company is focused on catering to the changing consumer needs and utilizing its robust scale to drive preneed sales at both its segments — Funeral and Cemetery. In doing so, it is actively pursuing strategic acquisitions for both the segments and building new funeral homes to generate greater returns. Some of the notable buyouts include Alderwoods Group (2006), Keystone North America (2010), The Neptune Society (2011) and Stewart Enterprises (2013). 

 

The company is also making technological advancements to better present its products and services to consumers. Notably, Service Corporation is well positioned to continue gaining from the aging Baby Boomer population, which is fueling the company’s preneed cemetery sales programs. Also, the company’s comparable funeral service revenues have been growing year over year for three straight quarters, with an increase in comparable funeral preneed sales production. These factors, along with the demographic landscape, remain tailwinds to the company’s revenues.

 

However, consumers’ rising inclination toward cremations over traditional burials may impede growth, as cremations generate lower revenues. Moreover, use of alternative channels, like e-commerce, to buy funeral related products poses competitive threats.

 

 

Our proven model does not conclusively show that Service Corporation is likely to beat estimates this quarter. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

 

Service Corporation has a Zacks Rank #3 (Hold) but an Earnings ESP of +0.00%, making surprise prediction difficult.

 

 

Here are some better-ranked companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

 

Archer Daniels Midland Company (ADM Quick QuoteADM - Free Report) has an Earnings ESP of +3.85% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Church & Dwight, Co. (CHD Quick QuoteCHD - Free Report) has an Earnings ESP of +0.26% and a Zacks Rank #3.

 

Hormel Foods Corporation (HRL Quick QuoteHRL - Free Report) has an Earnings ESP of +5.95% and a Zacks Rank #3.

 

 

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