SCI Q4 2025: Missed by a Penny, Spooked Wall Street, and Quietly Built a 2026 Game Plan
Service Corporation International (NYSE: SCI) just did the most SCI thing possible: grew earnings, printed cash, bought back stock… and still got punished for missing EPS (earnings per share) by one cent. The market response was dramatic enough to make you think they accidentally announced they’re pivoting into NFT urns.
Here’s what actually happened in Q4 2025, and what it tells us about deathcare, preneed, and SCI’s 2026 playbook.
The headline: “Miss”… but not the kind operators should care about
SCI reported adjusted EPS of $1.14 vs. $1.15 expected, and revenue of $1.11B vs. $1.12B expected. That microscopic miss triggered a sharp selloff (the kind that happens when spreadsheets get emotional).
Meanwhile, the business itself did what it always does:
- Full-year 2025 adjusted EPS: $3.85 (+9%)
- Adjusted operating cash flow: about $966M
- Capital returned to shareholders in 2025: $645M (buybacks + dividends)
This is not a company in chaos. This is a company that’s hyper-optimized for boring dominance.
Deathcare insight #1: Volumes are soft, and SCI is basically saying, “welcome back to normal”
The funeral segment had a familiar theme: solid revenue per call, fewer calls. SCI Chairman and Chief Executive Officer Tom Ryan laid it out:
- Core average revenue per service grew ~3.2% (healthy)
- Core services performed fell ~1.9% (not fun)
If you’re waiting for some magical “volume bounce,” SCI is politely telling you: the post-COVID weirdness is still unwinding. They specifically referenced the fading “COVID pull-forward” effect and broader normalization in excess deaths (overdose, traffic, etc.), which is good news for society, but a headwind for volume comps.
Translation for funeral home owners: If your call volume feels sluggish, you’re not crazy. But the winners in this cycle won’t be the ones who complain about volume; they’ll be the ones who win share while everyone else goes quiet.
Deathcare insight #2: SCI is quietly engineering margin protection (even with cremation creep)
SCI still expects the cremation mix to inch up (no surprise), and even mentioned the cremation rate increased modestly in the quarter. But what’s interesting is how they’re defending the profit engine anyway:
- Fixed cost growth managed below inflation through labor efficiency, dashboards, staffing tools, and best-practice sharing across the portfolio
- They’re guiding funeral segment margin expansion of ~20-60 bps in 2026 even with flat-to-down volumes
That’s the SCI advantage: scale, process, and discipline. Independents can absolutely beat them locally, but not by posting occasionally or doing random acts of marketing.
Preneed insight #1: The real story is the insurance shift (and why it makes margins look weird)
If you felt parts of this call sounded like accounting gymnastics, you’re not wrong: preneed is both a sales machine and a timing machine. SCI is moving more production from trust-funded preneed to insurance-funded preneed, especially inside SCI Direct, and that changes how revenue and costs show up:
- Insurance-funded preneed means general agency commissions get recognized immediately
- But it also means related selling costs show up immediately
- And it can replace prior-period higher-margin merchandise revenue with lower-margin commission revenue in comparisons.
- This is why a healthy business can still show margin pressure in certain lines while it’s transitioning.
They also said the general agency commission rate is now stabilizing in the mid-30% range after turbulence from product mix, cancellations, and the insurance partner transition.
Preneed insight #2: Preneed production is up, and SCI is leaning into “people power”
SCI put up real preneed momentum:
- Preneed sales production +11% in Q4
- Core preneed funeral production +12%
Then Tom Ryan basically gave away the operational blueprint for how they plan to keep that going:
1. Retention (more fixed comp vs variable)
2. More seminars (lead generation)
3. Better lead-to-sale conversion
4. Large sales focus + inventory + presentation
That is not accidental. That is a corporation saying: “We’re not waiting on volume. We’re manufacturing revenue.”
Cemetery: the profit monster is still eating
Cemetery remains SCI’s favorite child because it reliably spits out margin when managed correctly.
- Cemetery operating margin referenced at 36%+ in the quarter
- Growth drivers included trust income, velocity gains, and better sales execution
And here’s the sneaky important part: they’re specifically working on cemetery growth for cremation families with in-location media/video to show options and create awareness.
That’s a signal: The cemetery upsell is becoming a marketing and merchandising problem, not just a sales counselor problem.
2026 guidance: SCI is projecting “steady growth, don’t be dramatic”
SCI guided normalized EPS of $4.05–$4.35 (midpoint ~9% growth) and expects adjusted operating cash flow around $1.0B–$1.06B.
They also laid out the capital plan:
- Maintenance CapEx: ~$325M
- Acquisitions: $75M–$125M
- Growth capital: ~$70M–$80M (new builds/real estate)
This is what SCI does best: predictable cash, consistent reinvestment, disciplined buybacks.
My 2026 predictions for SCI (based on what they said, and what SCI always does)
1) Volume won’t save them, so they’ll keep buying growth and manufacturing preneed. They’re already guiding flat to slightly down funeral volume in 2026, and they’re essentially admitting the timing of demographic lift is more 2027–2029.
2) The insurance transition gets cleaner, and margins stop looking “off.” SCI Direct is now rolled out with insurance products across the network, and leadership expects trends to normalize and improve year-over-year.
3) More “cremation consumer” monetization inside cemeteries. If they can consistently attach cemetery value to cremation families’ property, niches, memorialization, and services, that’s incremental profit without needing more deaths.
4) Acquisitions stay “tuck-in and scale-friendly,” not moonshots. They reiterated the strategy: prioritize deals where SCI already has local scale so synergy actually exists.
What comes next for SCI: the forecast
Here’s the most honest SCI forecast you’ll read all week:
- SCI will keep compounding: modest revenue growth, margin protection, buybacks, and selective M&A because their model is built for exactly that.
- The stock can wobble when Wall Street gets spooked by volume softness or a penny miss, but the business is still designed to grind upward.
- 2026 likely looks like “execution year”: stabilize GA commissions, keep preneed growing low-to-mid single digits, keep cemetery margins expanding, and play defense on volume.
SCI isn’t trying to be exciting. They’re trying to be inevitable.
And in deathcare, inevitable usually wins.
