Service International’s fourth quarter results were met with a negative market reaction, as the company’s financials landed in line with Wall Street expectations but failed to spark investor enthusiasm. Management attributed the quarter’s performance to stable funeral and cemetery operations, with modest revenue gains offset by rising selling costs and flat funeral service volumes. CEO Thomas Ryan described the business as “navigating a normalization period” following pandemic-related fluctuations, noting, “We saw moderate increases in revenues and gross profit in both the funeral and cemetery segments driven by strength in comparable and noncomparable operations as well as slightly lower adjusted corporate, general and administrative expense.”
Is now the time to buy SCI? Find out in our full research report (it’s free for active Edge members).
Service International (SCI) Q4 CY2025 Highlights:
- Revenue: $1.11 billion vs analyst estimates of $1.12 billion (1.7% year-on-year growth, in line)
- Adjusted EPS: $1.14 vs analyst estimates of $1.14 (in line)
- Adjusted EBITDA: $367.6 million vs analyst estimates of $365.2 million (33.1% margin, 0.6% beat)
- Adjusted EPS guidance for the upcoming financial year 2026 is $4.20 at the midpoint, missing analyst estimates by 1.3%
- Operating Margin: 24.8%, in line with the same quarter last year
- Funeral Services Performed: 89,117, in line with the same quarter last year
- Market Capitalization: $11.2 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Service International’s Q4 Earnings Call
- Joanna Gajuk (Bank of America) pressed management on the predictability of large cemetery sales and the impact of winter storms, with CEO Thomas Ryan highlighting ongoing momentum but cautioning that large sales remain difficult to forecast due to their volatility.
- Albert Rice (UBS) asked about general and administrative expense trends and the normalization of commission rates; CFO Eric Tanzberger clarified that recent G&A fluctuations were mainly due to long-term incentive accruals, and that commissions should stabilize in the mid-30% range going forward.
- Tobey Sommer (Truist) queried the sustainability of low expense growth, with Ryan attributing it to proactive labor management and supply chain optimization, but acknowledging that cost discipline could be challenged if volumes rebound.
- Tomohiko Sano (JPMorgan) inquired about the company’s approach to developing premium cemetery inventory and pricing strategy, with Tanzberger emphasizing the focus on tiered offerings and high-return investments in mature metropolitan markets.
- Scott Schneeberger (Oppenheimer) asked about the drivers behind flat funeral volume guidance and the possibility of improvement, with Ryan explaining that declining excess deaths and normalization after pandemic surges are limiting near-term growth, though demographic trends could support future volume increases.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be monitoring (1) whether Service International can sustain preneed sales momentum and successfully expand premium cemetery offerings, (2) the pace at which cost containment efforts are maintained amid potential shifts in funeral volume, and (3) early signs that outreach initiatives to cremation customers are driving incremental revenue. Execution on digital investments and the integration of new acquisitions will also be important indicators of progress.
Service International currently trades at $80.47, down from $84.41 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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