Funeral services company Service International (NYSE:SCI) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 2.8% year on year to $1.07 billion. Its non-GAAP profit of $0.96 per share was 5.7% above analysts’ consensus estimates.
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Service International (SCI) Q1 CY2025 Highlights:
- Revenue: $1.07 billion vs analyst estimates of $1.06 billion (2.8% year-on-year growth, 1.3% beat)
- Adjusted EPS: $0.96 vs analyst estimates of $0.91 (5.7% beat)
- Adjusted EBITDA: $309.7 million vs analyst estimates of $321.9 million (28.8% margin, 3.8% miss)
- Management reiterated its full-year Adjusted EPS guidance of $3.85 at the midpoint
- Operating Margin: 23.4%, up from 22.2% in the same quarter last year
- Funeral Services Performed: 97,854, up 3,488 year on year
- Market Capitalization: $11.54 billion
Company Overview
Founded in 1962, Service International (NYSE: SCI) is a leading provider of death care products and services in North America.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Service International’s sales grew at a sluggish 5.4% compounded annual growth rate over the last five years. This was below our standard for the consumer discretionary sector and is a rough 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 2.3% over the last two years was below its five-year trend. 
We can better understand the company’s revenue dynamics by analyzing its number of funeral services performed, which reached 97,854 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 2.8% but beat Wall Street’s estimates by 1.3%.
Looking ahead, sell-side analysts expect revenue to grow 2.5% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its newer products and services will not accelerate its 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 22.5% 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 profit margin of 23.4%, up 1.2 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Service International’s EPS grew at a solid 14.1% compounded annual growth rate over the last five years, higher than its 5.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
In Q1, Service International reported EPS at $0.96, up from $0.89 in the same quarter last year. This print beat analysts’ estimates by 5.7%. Over the next 12 months, Wall Street expects Service International’s full-year EPS of $3.60 to grow 9.3%.
Key Takeaways from Service International’s Q1 Results
It was good to see Service International top analysts’ funeral services performed expectations this quarter, enabling it to beat on revenue and EPS. On the other hand, its EBITDA missed. Zooming out, we think this was a decent quarter. The stock traded up 5.3% to $83.89 immediately following the results.
So should you invest in Service International right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.