Funeral services company Service International (NYSE: SCI) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 4.4% year on year to $1.06 billion. Its non-GAAP profit of $0.87 per share was 4.9% above analysts’ consensus estimates.
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Service International (SCI) Q3 CY2025 Highlights:
- Revenue: $1.06 billion vs analyst estimates of $1.04 billion (4.4% year-on-year growth, 1.5% beat)
- Adjusted EPS: $0.87 vs analyst estimates of $0.83 (4.9% beat)
- Management reiterated its full-year Adjusted EPS guidance of $3.85 at the midpoint
- Operating Margin: 21.4%, in line with the same quarter last year
- Free Cash Flow Margin: 14.2%, down from 15.6% in the same quarter last year
- Funeral Services Performed: 84,636, down 1,107 year on year
- Market Capitalization: $11.34 billion
Company Overview
Founded in 1962, Service International (NYSE: SCI) is a leading provider of death care products and services in North America.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Service International’s 4.8% annualized revenue growth over the last five years was sluggish. This fell short of our benchmark for the consumer discretionary sector and is a tough starting point for our analysis.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Service International’s recent performance shows its demand has slowed as its annualized revenue growth of 2.7% over the last two years was below its five-year trend. 
We can dig further into the company’s revenue dynamics by analyzing its number of funeral services performed, which reached 84,636 in the latest quarter. Over the last two years, Service International’s funeral services performed were flat. Because this number is lower than its revenue growth during the same period, we can see the company’s monetization has risen. 
This quarter, Service International reported modest year-on-year revenue growth of 4.4% but beat Wall Street’s estimates by 1.5%.
Looking ahead, sell-side analysts expect revenue to grow 2.9% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and implies its newer products and services will not lead to better top-line performance yet.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Service International’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 22.2% over the last two years. This profitability was elite for a consumer discretionary business thanks to its efficient cost structure and economies of scale.
This quarter, Service International generated an operating margin profit margin of 21.4%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Service International’s EPS grew at an unimpressive 9.5% compounded annual growth rate over the last five years. This performance was better than its flat revenue but doesn’t tell us much about its business quality because its operating margin didn’t improve.
In Q3, Service International reported adjusted EPS of $0.87, up from $0.79 in the same quarter last year. This print beat analysts’ estimates by 4.9%. Over the next 12 months, Wall Street expects Service International’s full-year EPS of $3.77 to grow 9.8%.
Key Takeaways from Service International’s Q3 Results
It was encouraging to see Service International beat analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates and full-year EPS was reiterated. Zooming out, we think this was a solid quarter. The stock traded up 1.4% to $81.25 immediately after reporting.
So do we think Service International is an attractive buy at the current price? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
