Strong Segments To Fuel Service Corporation (SCI) Q4 Earnings
Zacks Investment Research | Feb 12, 2019 06:26AM ET
Service Corporation International (NYSE:SCI) is scheduled to report fourth-quarter 2018 results on Feb 18. In the last reported quarter, the company delivered negative earnings surprise of 2.8%. This marked the company’s first miss after surpassing earnings estimates for seven straight quarters. Let’s see how things are shaping up ahead of the upcoming quarterly results for this funeral services company.
Efforts to Boost Funeral and Cemetery Channels
Revenues in the comparable funeral service have been growing year over year for four straight quarters. This upside is primarily backed by higher general agency revenues and increased preneed revenues. In fact, preneed revenues are gaining from rising contracts sold through the company’s non-funeral home sales network. Further, comparable preneed funeral sales production is driven by strength in core and non-funeral home channels.
Additionally, Service Corporation focuses on catering to changing consumers’ needs as well as utilizing robust scale to drive preneed sales in the funeral and cemetery segments. In fact, it is also making technological advancements to better present products and services to consumers. These factors along with an aging Baby Boomer population are tailwinds.
Further, the company is committed toward pursuing strategic buyouts for both the segments and building new funeral homes to generate greater returns. Also, acquisitions in the cemetery segment are aimed at exploiting increased opportunities to cater to Baby Boomers. Service Corporation has an impressive record of making and integrating prudent businesses. Some notable acquisitions include Alderwoods Group, Keystone North America, The Neptune Society and Stewart Enterprises.
Can Strategies Offset Hurdles?
Higher costs associated with the company’s long-term incentive compensation program are denting profitability. Moreover, the company’s floating debt proportion is likely to keep interest costs high. Further, the company is witnessing rising trends in the number of cremations, as another option to the traditional funeral service. Well, average revenues from cremations with service are usually lower compared with traditional burials. Persistence of such trends is a threat to the company’s overall performance.
Nevertheless, we expect the company to tide over such hurdles on the back of the aforementioned revenue drivers. In fact, we note that such upsides have been aiding year-on-year growth in the top and the bottom line for a while. That said, let’s take a look at the picture unveiled by estimates and the Zacks Model for the impending quarter.
Service Corporation International Price, Consensus and EPS Surprise
Get The News You Want
Service Corporation International Quote
Which Way Are Estimates Headed?
The Zacks Consensus Estimate for fourth-quarter earnings is currently pegged at 56 cents, which indicates a rise from 50 cents reported in the year-ago quarter. Notably, the consensus mark is unchanged in the past 30 days.
Further, the Zacks Consensus Estimate for revenues is pegged at $846.8 million for the impending quarter, which indicates an increase of 4.2% from the year-ago quarter’s tally.
What Does the Zacks Model Say?
Our proven model does not show that Service Corporation is likely to beat estimates this quarter. A stock needs to have a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.