Back to top

Image: Bigstock

Service Corporation Q3 Earnings Miss Estimates, Revenues Rise 5% Y/Y

Read MoreHide Full Article

Key Takeaways

  • SCI's Q3 EPS rose 11.5% to 97 cents, while revenues grew 4.6% to $1.11 billion, both missing estimates.
  • Funeral revenues grew 5%, while cemetery revenues rose 4.3%, supported by higher preneed revenues and sales.
  • SCI cuts 2026 EPS view to $3.94-$4.04 on softer funeral volumes and cost pressures but keeps cash flow view.

Service Corporation International (SCI - Free Report) posted results for the third quarter of 2026, wherein both top and bottom lines missed the Zacks Consensus Estimate, while both increased from the year-ago period’s actuals.

Taking a Closer Look at SCI’s Quarterly Results

SCI reported adjusted earnings of 97 cents per share, which missed the Zacks Consensus Estimate of 98 cents. However, the metric increased 11.5% from adjusted earnings of 87 cents per share in the year-ago quarter.

Total revenues of $1,107.3 million increased 4.6% from $1,058.1 million in the year-ago quarter. Revenues missed the Zacks Consensus Estimate of $1,111 million.

Gross profit rose 2.5% to $272.3 million from $265.5 million last year. The gross margin contracted approximately 50 basis points to 24.6%.

Corporate general and administrative expenses decreased 20.2% to $30.6 million from $38.3 million in the prior-year period, primarily reflecting lower long-term incentive compensation expenses and a favorable legal settlement.

Operating income increased 11.7% to $252.9 million from $226.4 million in the year-ago quarter.

SCI Provides Insights by Segments

Funeral: Total funeral revenues reached $602.6 million, up 5% from $574.1 million in the third quarter of 2025. Gross profit increased 5.3% to $104.9 million from $99.6 million, while the gross margin expanded 10 basis points to 17.4%.

SCI performed 86,278 funeral services, higher than 84,636 services in the year-ago quarter. Average revenue per service increased 2.6% to $5,992 from $5,843.

Comparable funeral revenues increased 3.3% year over year to $588.2 million. Comparable core revenues rose 2.3%, supported by a 2.8% increase in core average revenue per service, partially offset by a 0.5% decline in core funeral services performed.

Comparable funeral gross profit increased 3.6% to $103.8 million, while the gross margin remained unchanged at 17.6%. Comparable preneed funeral sales production increased 6.1% to $323.5 million.

Cemetery: Total cemetery revenues were $504.6 million, up 4.3% from $484 million in the third quarter of 2025. Gross profit increased 0.9% to $167.4 million from $165.9 million, while the gross margin contracted 110 basis points to 33.2%.

Comparable cemetery revenues increased 4% to $503.4 million, driven by higher core revenues and other revenues. Core revenues increased 2.7%, supported by a 4% increase in recognized preneed revenues. Other revenues rose 19.7%.

Comparable cemetery gross profit increased 0.7% to $167.1 million, while the gross margin contracted 110 basis points to 33.2%. Comparable preneed cemetery sales production increased 4.8% to $369.2 million.

SCI’s Financial Health Snapshot

The company ended the quarter with cash and cash equivalents of $172.7 million, long-term debt of $4,977.9 million and total equity of $1,575.3 million.

Net cash provided by operating activities increased 17.6% to $296.8 million from $252.3 million in the prior-year quarter. 

Total capital expenditure was $99.5 million, including $30.8 million for capital improvements at existing field locations, $42.3 million for cemetery property development, $6.4 million for digital investments and corporate initiatives, and $20 million for growth capital expenditures related to new funeral service locations.

During the first nine months of 2026, SCI returned approximately $464 million to its shareholders through dividends and share repurchases.

What to Expect From SCI in 2026?

SCI updated the fourth-quarter earnings outlook and lowered its full-year adjusted earnings guidance, reflecting softer funeral volumes and continued cost pressures.

For the fourth quarter of 2026, the company expects adjusted earnings per share of $1.10-$1.20. The company lowered its full-year adjusted earnings guidance to $3.94-$4.04 per share from the previously projected $4.10-$4.30.

SCI reaffirmed its full-year adjusted operating cash flow guidance of $1,055-$1,115 million. Before cash taxes, adjusted operating cash flow is expected to be $1,175-$1,235 million.

The company maintained its maintenance capital expenditure outlook of approximately $335 million.

This Zacks Rank #3 (Hold) stock has fallen 3.5% in the past three months compared with the industry’s decline of 5.5%.

Zacks Investment Research
Image Source: Zacks Investment Research

Stocks to Consider

Lamb Weston Holdings, Inc. (LW - Free Report) engages in the production, distribution and marketing of frozen potato products in the United States, Canada, Mexico and internationally. LW presently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year earnings indicates 7.6% growth from the year-ago numbers. Lamb Weston delivered a trailing four-quarter earnings surprise of 22.1%, on average.

The Chefs' Warehouse, Inc. (CHEF - Free Report) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. At present, CHEF carries a Zacks Rank #2 (Buy). Chefs' Warehouse delivered a trailing four-quarter earnings surprise of 30.4%, on average.

The consensus estimate for Chefs' Warehouse’s current fiscal-year sales and earnings implies growth of 10.8% and 34.2%, respectively, from the year-ago reported figures. 

Mama's Creations, Inc. (MAMA - Free Report) manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA holds a Zacks Rank of 2. Mama's Creations delivered a trailing four-quarter earnings surprise of 121.7%, on average.

The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 30.3% and 66.7%, respectively, from the year-ago figures.

Published in