Abstract
Service will report fourth-quarter results on February 11, 2026 Post Market; this preview outlines consensus revenue, margin, and EPS expectations, evaluates the last quarter’s delivery versus guidance, and consolidates institutional sentiment for a near-term outlook.Market Forecast
Consensus for Service’s current quarter points to revenue of $1.12 billion, EBIT of $275.46 million, and adjusted EPS of $1.15, implying year-over-year growth of 3.05 percent, 2.93 percent, and 9.26 percent, respectively. The market anticipates a gross profit margin around the prior-quarter level of 25.10 percent and a steady net profit margin profile near 11.10 percent, with adjusted EPS building on sequential operating leverage.Management continues to emphasize resilient at-need demand and stable preneed sales across funeral and cemetery operations. The cemetery business is expected to be the most promising segment, supported by preneed backlog conversion and pricing, with revenue last quarter of $484.03 million and a solid year-over-year expansion implied by segment mix shift.
Last Quarter Review
Service’s last reported quarter delivered revenue of $1.06 billion, a gross profit margin of 25.10 percent, GAAP net income attributable to shareholders of $0.12 billion, a net profit margin of 11.10 percent, and adjusted EPS of $0.87, with year-over-year growth of 10.13 percent on EPS and 4.35 percent on revenue.The company exceeded consensus on both revenue and EPS, with EBIT of $227.19 million surpassing estimates and demonstrating disciplined cost control amid moderating COVID comp effects. Main business highlights included funeral revenue of $574.06 million and cemetery revenue of $484.03 million, with a balanced mix that supported margins through pricing and sales mix optimization.
Current Quarter Outlook
Core Funeral Home Operations
The funeral segment remains the cornerstone of Service’s business model, underpinned by steady at-need case volumes and an ongoing recovery in average revenue per service. Pricing actions implemented earlier in the year continue to flow through, helping to defend gross margin against wage and utility inflation. On a sequential basis, case mix normalization can dampen unit growth, yet revenue per case remains supported by merchandising and service packages, which should allow the segment to demonstrate modest operating leverage as fixed-cost absorption improves with seasonal volume.The company’s preneed funeral sales pipeline offers visibility into future at-need conversions, and management’s emphasis on sales productivity has improved lead-to-contract conversion rates. While labor cost inflation remains a headwind, targeted staffing efficiency and procurement savings on merchandise can cushion gross margin volatility. A stable net profit margin near 11.10 percent suggests the current quarter should reflect a similar profitability profile, provided volume trends track seasonal patterns and mix does not shift unfavorably toward lower-margin services.
Operationally, investments in digital arrangement tools and call-center support have streamlined the customer journey, reducing sales friction and enabling better cross-sell rates for ancillary services. This should contribute incrementally to both revenue per case and margin sustainability in the quarter, even if absolute case counts are flattish year over year.
Cemetery and Preneed Backlog Conversion
The cemetery segment is positioned to contribute disproportionately to growth due to preneed backlog realization and pricing discipline. The last quarter’s segment revenue of $484.03 million highlights robust demand for cemetery property and related services, which typically carry attractive margins once fixed development costs are absorbed. As more projects reach completion and sales milestones are met, revenue recognition from preneed contracts should accelerate, aiding both top line and EBIT growth.A meaningful element of this quarter’s trajectory hinges on the pace of property sales conversion and the mix of memorialization products, which can enhance average revenue per contract. Supply-side dynamics—such as the availability of developed inventory in key markets—can influence close rates and delivery timing, but the backlog provides a buffer that reduces volatility. Assuming stable economic conditions, pricing plus mix is likely to deliver modest year-over-year growth in cemetery revenue that aligns with the 3.05 percent total revenue expectation, with incremental upside if conversion rates improve late in the quarter.
Margin contributions from cemetery are further supported by operational initiatives in construction efficiency, vendor agreements for granite and bronze, and improved installation throughput, which collectively reduce cost of goods sold per unit and underpin segment gross margin. These efficiencies, combined with a disciplined cadence of new inventory releases, frame the cemetery segment as the most promising growth vector for the period.
Key Share Price Drivers This Quarter
Investors are focused on the trajectory of gross profit margin relative to last quarter’s 25.10 percent print, as cost inflation abates but labor expenses remain structurally higher. A modest improvement would reinforce the EPS growth outlook of 9.26 percent year over year, while any unexpected compression could temper sentiment even if revenue meets expectations. The second driver is preneed sales momentum and backlog conversion, which serve as a forward indicator for both funeral and cemetery activity; updates on contract originations and cancellations will be closely parsed for clues on demand durability.The third driver is operating expense control and its translation into EBIT margin, with the forecast at $275.46 million implying stable operating leverage versus prior-quarter actual EBIT of $227.19 million. Any commentary on discretionary spending discipline, especially marketing and field labor allocation, could shape expectations for margin trajectory into the first half of 2026. Finally, capital allocation signals—share repurchases and leverage trajectory—can influence EPS cadence and valuation multiples, particularly if free cash flow conversion remains consistent with historical patterns.
Analyst Opinions
Across recent institutional commentary, the balance of views skews bullish, with a majority expecting stable to improving margins and single-digit revenue growth to support high-single-digit EPS expansion. Analysts highlight that the demand environment is steady and that preneed program health, including conversion rates and average selling prices, remains supportive of revenue visibility in both funeral and cemetery segments. This majority view emphasizes that operating discipline should mitigate lingering wage pressures, preserving an EBIT trajectory consistent with the $275.46 million forecast.Prominent sell-side voices point to the previous quarter’s outperformance on revenue and EPS as evidence of resilient execution. They also flag that the cemetery backlog and continued pricing actions are important offsets to any moderation in at-need funeral volumes. The consensus case maintains that Service can deliver revenue near $1.12 billion with an adjusted EPS of $1.15, anchoring on a gross margin profile near 25.10 percent and a consolidated net margin close to 11.10 percent, with upside potential if backlog conversion accelerates and cost efficiency gains persist into late-quarter. The bullish majority therefore centers on incremental margin improvement and dependable free cash flow, which could validate the cautiously constructive stance into the print.
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