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Factors to Watch Before Service Corporation's (SCI) Q3 Earnings

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Service Corporation International (SCI - Free Report) is likely to display year-over-year declines in the top and bottom lines, when it reports third-quarter 2021 numbers on Oct 27. The Zacks Consensus Estimate for revenues is pegged at $800 million, suggesting a drop of 12.9% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for earnings has remained stable over the past 30 days at 45 cents per share, which indicates a decline of 43% from the figure reported in the prior-year period. In the last reported quarter, the company delivered an earnings surprise of 39.4%. The company has a trailing four-quarter negative earnings surprise of 45.5%, on average.

Key Factors to Note

Service Corporation’s funeral volumes have been seeing tough comparisons with the year-ago period’s increased pandemic-led deaths. On its second-quarter earnings call, management stated that for the back half of 2021, it expects comparable funeral volume to decline at a high-teen percentage rate. Similar to the funeral volumes, at-need cemetery revenues are expected to decline in the mid- to high-teens percentage rate in the back half of 2021. The preneed cemetery sales production is anticipated to decline at a mid-single-digit percentage rate during the same time period. Management stated that it continues to expect the future earnings per share and cash flows to be temporarily affected by the funeral case volumes in the at-need cemetery sales being pulled forward into 2020 and 2021 beginning. These factors raise concerns over the company’s performance during quarter under review.

Apart from these, elevated staffing and service level comps related to operating at the full-service facilities, compared with the limited-service structure in the year-ago period, poses threats to the company’s margin. Nonetheless, the company’s Cemetery segment revenues have been rising year over year for a while. Focus on expansion through buyouts and constructing new funeral homes have also been aiding.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Service Corporation this time around. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Service Corporation currently carries a Zacks Rank #3 and has an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Hershey (HSY - Free Report) has an Earnings ESP of +1.02% and carries a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Coca-Cola Company (KO - Free Report) has an Earnings ESP of +0.75% and carries a Zacks Rank #3, currently.

The Estee Lauder Companies (EL - Free Report) has an Earnings ESP of +0.24% and currently holds a Zacks Rank #3.