A month has gone by since the last earnings report for Service Corp. (SCI). Shares have lost about 5.9% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Service Corp. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Service Corporation Q1 Earnings Miss on Lower Funeral Volumes
Service Corporation posted adjusted earnings of 97 cents per share, which rose 1% year over year while missing the Zacks Consensus Estimate of $1.00. Revenues increased 2.1% year over year to $1,096.5 million and beat the consensus mark of $1,088 million. Comparable cemetery preneed sales production rose 10% in the quarter, helping offset softer funeral volumes.
SCI generated operating income of $243.8 million in the first quarter of 2026, down from $251.7 million a year ago.
SCI’s Funeral Results Weaken on Volume Declines
The company’s funeral segment faced a volume-driven headwind in the quarter. Total funeral revenues were $630.6 million versus $639.5 million in the first quarter of 2025, reflecting lower activity across core and non-funeral home channels. Profitability in the segment also softened. Funeral gross profit fell to $134 million from $154 million, with gross margin contracting to 21.2% from 24.1%. Funeral services performed declined to 93,686 from 97,854, though average revenue per service increased to $5,919 from $5,748.
Comparable funeral revenues decreased to $620.2 million from $637.6 million, as core volumes moved lower. Comparable gross profit declined to $132.6 million from $155.4 million, and the comparable gross margin compressed to 21.4% from 24.4%, highlighting the impact of lower revenues across a high fixed-cost structure.
Service trends were mixed across categories. Comparable atneed services performed were 47,978 compared with 52,187 a year ago, while matured preneed services were 28,509 versus 29,724. Even with fewer services, total comparable average revenue per service rose to $5,947 from $5,754, and the core cremation rate edged up to 57.8% from 57.4%.
SCI’s Cemetery Segment Delivers Strong Growth
Service Corporation’s cemetery segment was the quarter’s clear bright spot. Cemetery revenues increased to $465.9 million from $434.7 million in the year-ago quarter, supported by higher recognized preneed property revenues of $209.6 million versus $188.7 million, and higher recognized preneed merchandise and service revenues of $106.3 million versus $98.5 million.
Margin performance improved alongside growth. Cemetery gross profit rose to $152.5 million from $137.4 million, and gross margin expanded to 32.7% from 31.6%, reflecting favorable operating leverage as recognized preneed activity increased.
Comparable cemetery revenues rose to $465.5 million from $434.7 million, driven by higher core revenues of $424.7 million versus $399.5 million and higher other revenue of $40.8 million versus $35.2 million. Comparable gross profit grew to $152.5 million from $137.5 million, and the comparable gross profit percentage improved to 32.8% from 31.6%.
Comparable cemetery preneed sales production increased to $356.2 million from $324.6 million, while total preneed and atneed sales production rose to $466.5 million from $437.8 million. The recognition rate was 91% compared with 91.3% in the prior-year quarter.
SCI’s 2026 View Reaffirmed, Cash Flow Improves
Service Corporation’s adjusted operating cash flow increased to $334.5 million for the first quarter, driven by favorable working capital movements. Total capital expenditures were $79.9 million compared with $78.2 million a year ago, reflecting continued investment in field locations, cemetery development and growth projects. SCI ended the quarter with cash and cash equivalents of roughly $258 million, while long-term debt was nearly $5.11 billion.
Management reaffirmed 2026 guidance for diluted earnings per share excluding special items of $4.05-$4.35 and net cash provided by operating activities excluding special items of $1.005-$1.065 billion, with maintenance capital expenditures expected to total $325 million.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -10.36% due to these changes.
VGM Scores
At this time, Service Corp. has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Service Corp. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Service Corporation International (SCI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).