Service Corporation (SCI) To Post Q2 Earnings: What's Up?

Service Corporation International (NYSE:SCI) is scheduled to report second-quarter 2019 results on Jul 29. In the last reported quarter, the company delivered positive earnings surprise of 14.6%. In the trailing four quarters, the company outperformed the Zacks Consensus Estimate, recording average positive earnings surprise of 2.6%. Let’s see how things are shaping up ahead of the upcoming quarterly results for this funeral services company.

Estimates Unveil Bright Prospects

The Zacks Consensus Estimate for second-quarter earnings is pegged at 47 cents, indicating a rise of 6.8% from 44 cents reported in the year-ago quarter. Notably, the consensus mark has remained stable over the past 30 days.

For revenues, the consensus estimate stands at $809.6 million, up 1.7% from the year-ago quarter.

Factors to Drive Q2

Service Corporation’s impending quarterly results are likely to benefit from strategic growth efforts, which are mainly aimed toward growing revenues, utilizing scale and deploying capital efficiently. The company remains focused on catering to changing consumer needs and utilizing its operating scale to drive preneed sales. 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 likely to remain as tailwinds for the upcoming quarter.

Further, the company is committed toward pursuing buyouts for both its 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. Notably, the company has a solid record of undertaking prudent acquisitions. Some notable buyouts made by the company in the past include Alderwoods Group, Keystone North America, The Neptune Society, and Stewart Enterprises. All these factors are likely to have a favorable impact on the to-be-reported quarter’s results.

Hurdles on the Way

Service Corporation is witnessing escalated general and administrative costs and increased interest expense. Moreover, the company’s floating debt proportion is likely to keep interest costs high and thereby be a pressure on the bottom line. Apart from these, lower demand for traditional funeral services is a threat to its overall performance

Nevertheless, we expect the company to tide over such hurdles on the back of the aforementioned key growth catalysts.

What Our Model Says

Our proven model does not conclusively show that Service Corporation is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Though Service Corporation carries a Zacks Rank #3, an Earnings ESP of 0.00% makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

The Estee Lauder Companies Inc (NYSE:EL) has an Earnings ESP of +7.80% and a Zacks Rank #2.

Columbia Sportswear Company (NASDAQ:COLM) has an Earnings ESP of +40.00% and a Zacks Rank #2 at present.

Weight Watchers International, Inc. (NASDAQ:WW) currently has an Earnings ESP of +3.68% and a Zacks Rank #2.

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