Service Corp International (SCI) · Oct 28, 2026 · Earnings

SCI earnings miss as full-year guidance gets cut on rising costs

Miss — Adj. EPS $0.97 vs ~$0.99 consensus; FY guide cut to $3.94–$4.04 from $4.10–$4.30

Service Corporation International earnings showed solid revenue and preneed growth, but adjusted EPS missed consensus and full-year guidance fell.

SCI is in the middle of a deliberate preneed-led growth strategy: it is investing in sales capacity, cemetery development, acquisitions, and new locations to build a backlog of future funeral and cemetery revenue. Preneed sales are central to that model, while the company uses its scale and network to convert that backlog into recurring revenue and cash flow.

The quarter was operationally decent but financially below the bar. Revenue came in modestly above the published consensus of roughly $1.10 billion, but adjusted EPS of $0.97 trailed the roughly $0.99 estimate. The earnings shortfall matters more than the small revenue beat because the main issue was cost absorption, not demand. The filing says, “We reported adjusted earnings per share of $0.97and adjusted net cash provided by operating activities of $296.9million, both delivering double-digit growth compared to the prior-year quarter.”

Preneed demand remains the strategic bright spot, but it is currently expensive to build. Comparable funeral preneed sales production rose 6.1%, cemetery preneed sales production rose 4.8%, and comparable cemetery revenue increased 4.0%. That supports SCI’s long-term backlog thesis, but the near-term payoff is lagging the spending: cemetery gross margin fell to 33.2% from 34.3%, while higher healthcare, selling compensation, advertising, and marketing costs also pressured funeral profitability. The filing acknowledges, “Despite these positive revenue and sales trends, margins were pressured by higher healthcare costs, higher selling compensation costs and increased advertising and marketing expenditures supporting our preneed sales growth.” 〔0〕

Management cut the earnings outlook, confirming that the cost pressure is not just a one-quarter issue. The prior quarterly update had reaffirmed a $4.20 midpoint and a $4.10–$4.30 adjusted EPS range; the new $3.94–$4.04 range lowers the midpoint to $3.99. Management specifically cited lower-than-expected funeral volumes, healthcare costs, selling compensation, and advertising and marketing spending. The fourth-quarter guide of $1.10–$1.20 implies the company expects the pressure to persist through year-end. The filing states, “We expect fourth quarter 2026 adjusted earnings per share of $1.10to $1.20.”

Cash generation cushions the reset, but does not erase it. Adjusted operating cash flow rose 11% year over year, and management maintained the full-year cash-flow midpoint at $1.085 billion while keeping maintenance capital spending at $335 million. That preserves funding for development, acquisitions, buybacks, and dividends, but the divergence between maintained cash-flow guidance and reduced EPS guidance suggests the business is converting growth into cash better than it is converting it into near-term profit. The filing says, “We are maintaining our full-year adjusted operating cash flow guidance, with a midpoint of $1,085million.”

Bottom line: SCI is still building the right long-term backlog, and revenue and cash flow held up, but the earnings story weakened: cost inflation and lower funeral volumes forced a fresh full-year EPS cut. This is a mixed quarter with a clear near-term setback, not a failure of the underlying preneed strategy.

What to watch next

Q4 earnings report, early February 2027

Original filing on SEC EDGAR

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• Service Corporation International dividend holds at 36 cents