Q3 Adjusted EPS Rises 11% but Cost Pressures and Soft Funeral Volumes Weigh on Q4 Outlook
SCI sits 20% above its 52-week low of $68.41.
Summary
SCI delivered Q3 adjusted EPS of $0.97, up 11% from $0.87, on revenue of $1,107.3 million, a 5% increase. GAAP EPS jumped 24% to $1.03, helped by $11.2 million of net gains on non-strategic asset divestitures. Preneed sales production stayed strong, with comparable funeral preneed up 6% and cemetery preneed up 5%. The problem is the outlook: management guided Q4 adjusted EPS to $1.10-$1.20 and full-year to $3.94-$4.04, citing lower funeral volumes than originally anticipated plus higher healthcare, selling compensation, and advertising costs. Full-year adjusted operating cash flow guidance was maintained at a $1,085 million midpoint, so cash generation is intact even as margins compress. The stock reaction will hinge on whether investors treat the cost pressure as temporary investment in preneed growth or a structural margin problem. The Q4 earnings release and conference call on October 29 will be the next checkpoint.
At the time of this announcement, SCI was trading at $82.33 on NYSE in the Trade & Services sector, with a market capitalization of approximately $11.2B. The 52-week trading range was $68.41 to $90.99. This news item was assessed with negative market sentiment and an importance score of 8 out of 10. Source: PR Newswire.