Group 1 - Kirin Holdings Co. is a notable stock in the Consumer Staples sector, currently ranked 14 in the Zacks Sector Rank, which evaluates 16 different groups based on the average Zacks Rank of individual stocks [2] - The Zacks Rank model, which focuses on earnings estimates and revisions, currently assigns Kirin Holdings Co. a Zacks Rank of 2 (Buy), indicating a positive outlook for the stock [3] - Year-to-date, Kirin Holdings Co. has achieved a return of approximately 13.3%, significantly outperforming the average return of -0.3% for the Consumer Staples sector [4] Group 2 - Kirin Holdings Co. operates within the Beverages - Alcohol industry, which consists of 16 stocks and is currently ranked 199 in the Zacks Industry Rank, with the industry showing a loss of about 0.7% year-to-date [6] - In comparison, another stock in the Consumer Staples sector, Service Corp. (SCI), has a year-to-date return of 1.2% and is ranked 2 (Buy) as well [5] - The Funeral Services industry, where Service Corp. operates, has three stocks and is ranked 29, with a year-to-date performance of -0.2% [6]

Core Insights - The company has experienced better-than-expected volume performance in its funeral and cemetery segments, with volumes normalizing despite initial expectations of a decline [1] - The third quarter showed a 3% decline in volume, which aligned with the company's anticipated seasonal trends, indicating stability in volume fluctuations [1] - The company anticipates continued foundational strength moving forward, suggesting a positive outlook for future performance [2]

Core Insights - The third-quarter 2025 investor letter from Aristotle Capital Boston, LLC indicates that U.S. small/mid-cap equities performed well, with the strategy returning 2.57% net of fees, underperforming the Russell 2500 Index's 9.00% total return [1]. Company Overview - Service Corporation International (NYSE:SCI) is identified as North America's largest provider of deathcare products and services, strategically positioned to benefit from demographic trends due to the aging Baby Boomer population [3]. - As of October 31, 2025, Service Corporation International's stock closed at $83.51 per share, with a market capitalization of $11.707 billion [2]. Performance Metrics - Service Corporation International's one-month return was -0.12%, while its shares gained 1.63% over the last 52 weeks [2]. - The company is expected to experience operating leverage and margin expansion due to its high fixed-cost structure and rising volumes [3]. Investment Strategy - The company employs a balanced capital allocation strategy that includes dividends, share repurchases, and acquisitions to enhance total shareholder value [3]. - Despite its potential, Service Corporation International is not among the 30 most popular stocks among hedge funds, with 30 hedge fund portfolios holding the stock at the end of the second quarter, an increase from 26 in the previous quarter [4].

Core Insights - The company reported financial results for the three months and nine months ended September 30, 2025, indicating solid improvement compared to the same period last year [1] Financial Performance - The third quarter financial results for 2025 show significant growth over the previous year [1]

Core Insights - Service Corporation International (SCI) reported strong third-quarter 2025 results, with year-over-year increases in both revenue and earnings, surpassing the Zacks Consensus Estimate [1][2][3] - The company reaffirmed its 2025 earnings outlook and raised its cash flow guidance, indicating improved operational performance and financial discipline [1][15][16] Financial Performance - Adjusted earnings per share (EPS) reached $0.87, exceeding the Zacks Consensus Estimate of $0.83, and reflecting a 10.1% increase from $0.79 in the same quarter last year [2][8] - Total revenues amounted to $1,058.1 million, a 4.4% increase from $1,014 million in the prior year, also beating the consensus estimate of $1,041 million [3][8] - Gross profit rose 5.1% to $265.5 million, with a gross margin expansion of 30 basis points to 25.1% [3][4] Cost Management - Corporate general and administrative expenses decreased by 12.4% year over year to $38.3 million, representing 3.6% of total revenues, down 70 basis points [4][8] - Operating income increased by 6.6% to $226.4 million, with an operating margin improvement of 40 basis points to 21.4% [4][8] Segment Performance - Funeral Operations generated total revenues of $574.1 million, slightly above the consensus estimate, but gross profit declined 7.7% to $99.6 million [5][8] - Cemetery Operations reported total revenues of $484 million, surpassing the consensus estimate, with gross profit increasing 14.6% to $165.9 million [9][10] Guidance and Cash Flow - The company confirmed the mid-point of its 2025 EPS guidance at $3.85, narrowing the range to $3.80-$3.90, with expected adjusted earnings growth of 8-12% [15][16] - Cash flow guidance was raised, projecting net cash provided by operating activities (excluding special items) between $1.05 billion and $1.09 billion [16][18] Financial Health - As of the end of the quarter, SCI had cash and cash equivalents of $241.3 million, long-term debt of $4.96 billion, and total equity of $1.57 billion [13][18] - Total capital expenditure for 2025 is projected at $315 million, with allocations for capital improvements, cemetery development, and digital investments [14][18]

Operations and Locations - As of September 30, 2025, the company operates 1,487 funeral service locations and 499 cemeteries, with a backlog of future revenue amounting to $16.8 billion from preneed sales[98] - The company served approximately 700,000 families in 2025 through its Dignity Memorial® brand, focusing on exceptional service and personalized remembrances[99] - The company aims to invest in strategic acquisitions and new funeral service and cemetery locations to enhance growth and achieve economies of scale[108] Financial Performance - Net cash provided by operating activities increased to $729.9 million for the nine months ended September 30, 2025, compared to $680.8 million for the same period in 2024, reflecting a $49.1 million increase[112] - For the three months ended September 30, 2025, consolidated net income attributable to common stockholders was $117.5 million ($0.83 per diluted share), compared to $117.8 million ($0.81 per diluted share) in the same period of 2024[147] - Consolidated funeral revenue for Q3 2025 was $574.1 million, a 1.4% increase from $566.0 million in Q3 2024[150] - For the nine months ended September 30, 2025, consolidated funeral revenue was $1,804.9 million, a $68.4 million increase from $1,736.5 million in 2024[168] Revenue and Sales - Preneed insurance-funded sales production reached $214.3 million in Q3 2025, up from $164.1 million in Q3 2024, with the number of contracts sold increasing from 28,000 to 41,617[124] - Total sales production for the cemetery segment increased to $457.2 million in the third quarter of 2025, up 9.5% from $418.2 million in 2024[126] - Total recognized preneed revenue grew by $13.1 million, supported by a 4.1% increase in comparable preneed sales production, amounting to $40.4 million[175] Profitability - Consolidated funeral gross profit decreased by $8.3 million, or 7.7%, to $99.6 million in Q3 2025, with comparable gross profit percentage dropping from 19.2% to 17.5%[155] - Consolidated cemetery gross profit increased by $21.1 million, or 14.6%, to $165.9 million in Q3 2025, with comparable gross profit percentage rising from 32.4% to 34.0%[160] - The gross profit percentage remained flat at 32.8%, as revenue increases were offset by higher selling compensation and modest fixed cost growth[176] Cash Flow and Investments - Cash flows from investing activities decreased to $341.4 million in 2025 from $484.6 million in 2024, primarily due to reduced cash spent on business acquisitions and real estate[112] - Interest expense decreased by $3.3 million to $191.2 million, mainly due to lower interest rates on floating rate debt[179] Debt and Leverage - The company’s leverage ratio as of September 30, 2025, was 3.61, well within the maximum allowable ratio of 5.00[106] - Total surety bonds outstanding increased to $504.9 million as of September 30, 2025, compared to $454.4 million at the end of 2024[115] Tax and Shares - The effective tax rate increased to 26.1% for the nine months ended September 30, 2025, compared to 23.1% in 2024, primarily due to changes in tax estimates[180] - The diluted weighted average number of shares outstanding decreased to 143.2 million from 147.0 million, reflecting the impact of share repurchases[182] Market Risks - The company faces various market risks, including potential impacts from economic conditions, regulatory changes, and competition in the funeral and cemetery industry[187]

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) of $0.87 for Q3 2025, a more than 10% increase from $0.79 in the prior year period [4] - Total comparable funeral revenue declined by almost $2 million, or less than 1%, compared to the prior year quarter [5] - Comparable core funeral revenue decreased by $3 million, or just under 1%, primarily due to a 3.5% decrease in core funeral services performed [6] - Cemetery revenue increased by $31 million or almost 7%, driven by higher core revenue [11] Business Line Data and Key Metrics Changes - Funeral gross profit decreased by $9.5 million, with the gross profit percentage declining by 170 basis points to about 18% [9] - Non-funeral home revenue increased by $3 million, primarily due to a 13.4% increase in the average revenue per service [7] - Comparable cemetery revenue increased by $27.5 million or 7% over the prior year quarter, primarily due to a $27 million increase in total recognized preneed revenue [12] Market Data and Key Metrics Changes - Preneed funeral sales production increased by $6 million or about 2% over Q3 2024, while core preneed funeral sales production increased by $20 million or 9% [10] - Non-funeral home preneed sales revenue decreased by $4.6 million due to the decision to stop delivering preneed merchandise at the time of sale [8] - The core cremation rate increased modestly by 50 basis points to 57.3% [6] Company Strategy and Development Direction - The company confirmed the midpoint of its normalized EPS guidance for 2025, narrowing the range to $3.80 to $3.90 [13] - The company expects modest funeral revenue and gross profit growth compared to Q4 2024, with low to mid single-digit cemetery preneed sales production growth anticipated [14] - The company aims to achieve EPS growth within its long-term growth framework of 8% to 12% [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum heading into 2026, expecting favorable trends in funeral volume and cemetery sales [15] - The company anticipates that the pull forward effect on funeral volumes will be negligible going forward, with demographics and a strong preneed backlog expected to drive future growth [13][70] - Management highlighted the importance of educating consumers about cremation options to drive sales growth [44] Other Important Information - The company generated adjusted operating cash flow of $268 million in the quarter, an increase of $10 million from the prior year [17] - Capital investments totaled $140 million in the quarter, with $123 million returned to shareholders through dividends and share repurchases [19][20] - The company ended the quarter with liquidity of just under $1.5 billion and a leverage ratio of 3.6 times net debt to EBITDA [23] Q&A Session Summary Question: Can you discuss cemetery preneed sales production trends? - Management noted strong velocity in cemetery preneed sales, with large sales up almost 18% and a focus on flexible financing plans contributing to growth [26][29] Question: What is the confidence level in achieving the 8% to 12% EPS growth target for next year? - Management expressed an 85% to 90% assurance in achieving the target, citing historical growth rates and the importance of revenue growth [31][32] Question: How does the company plan to educate consumers about cremation options? - Management emphasized the need for better visibility and education regarding cremation products, noting that many consumers are unaware of available options [57] Question: What is the outlook for SCI Direct sales production post-transition? - Management expects growth off the new base in 2026 but does not anticipate returning to pre-transition levels for a couple of years [75]

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) of $0.87 for Q3 2025, a more than 10% increase from $0.79 in the prior year period [4] - Total comparable funeral revenue declined by almost $2 million, or less than 1%, compared to the prior year quarter [5] - Comparable core funeral revenue decreased by $3 million, or just under 1%, primarily due to a 3.5% decrease in core funeral services performed [6] - Cemetery revenue increased by $31 million or almost 7%, driven by a $27 million increase in total recognized preneed revenue [11] Business Line Data and Key Metrics Changes - Funeral gross profit decreased by $9.5 million, with the gross profit percentage declining by 170 basis points to about 18% [9] - Non-funeral home revenue increased by $3 million, primarily due to a 13.4% increase in the average revenue per service [7] - Comparable cemetery revenue increased by $31 million or almost 7%, with core revenue up by $27.5 million or 7% [11][12] - Preneed funeral sales production increased by $6 million or about 2% over the third quarter of 2024 [10] Market Data and Key Metrics Changes - The core cremation rate increased modestly by 50 basis points to 57.3% [6] - Total recognized preneed revenue benefited from growth in comparable cemetery preneed sales production of $30 million or almost 10% [12] - Large sales grew by $8 million or 19% over the prior year quarter [12] Company Strategy and Development Direction - The company confirmed the midpoint of its normalized EPS guidance for 2025 at $3.80-$3.90, slightly raising its cash flow outlook due to stronger working capital trends [13] - The company expects modest funeral revenue and gross profit growth compared to the fourth quarter of 2024 [14] - The company anticipates low to mid single-digit cemetery preneed sales production growth, with a focus on educating consumers about cremation options [44][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving EPS growth within the long-term growth framework of 8%-12% [15] - The company expects favorable trends in funeral volume, average sales, and cemetery sales, alongside lower interest rates [15] - Management noted that the impact from the share repurchase program would favorably affect EPS compared to the prior year [15] Other Important Information - The company generated adjusted operating cash flow of $268 million in the quarter, an increase of $10 million from the prior year [17] - Capital investments totaled $140 million in the quarter, with $123 million returned to shareholders through dividends and share repurchases [19][20] - The company ended the quarter with liquidity of just under $1.5 billion and a leverage ratio of 3.6x net debt to EBITDA [23] Q&A Session Summary Question: Discussion on cemetery preneed sales production and trends - Management noted strong velocity in cemetery preneed sales and expressed confidence in sustaining this trend into next year [26][30] Question: Confidence in achieving 8%-12% EPS growth - Management indicated a historical assurance level of 85%-90% for achieving the EPS growth target, emphasizing revenue growth as a key driver [31][32] Question: Sales trends at the largest location, Rose Hills - Management reported strong performance at Rose Hills, with double-digit growth expected to continue [51] Question: Expense control and pressure areas - Management acknowledged some pressure on cemetery maintenance costs but expressed confidence in managing overall expenses [55] Question: Education on cremation options - Management highlighted efforts to increase consumer awareness of cremation options and the potential for growth in this area [59][60] Question: Transition effects on SCI Direct production - Management expects growth in SCI Direct sales production in 2026 but does not anticipate returning to pre-transition levels immediately [76]

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) of $0.87, a more than 10% increase compared to $0.79 in the prior year period [4] - Total comparable funeral revenue declined by almost $2 million, or less than 1%, compared to the prior year quarter [5] - Funeral gross profit decreased by $9.5 million, with the gross profit percentage declining by 170 basis points to about 18% [9] - Adjusted operating cash flow increased by $10 million from the prior year, totaling $268 million for the quarter [17] - The company confirmed the midpoint of its normalized EPS guidance for 2025, narrowing the range to $3.80 to $3.90 [13] Business Line Data and Key Metrics Changes - Comparable core funeral revenue declined by $3 million, or just under 1%, primarily due to a 3.5% decrease in core funeral services performed [6] - Non-funeral home revenue increased by $3 million, primarily due to a 13.4% increase in the average revenue per service [6] - Comparable cemetery revenue increased by $31 million or almost 7%, driven by a $27 million increase in total recognized preneed revenue [11] - Cemetery gross profit grew by $18 million, with the gross profit percentage increasing by 160 basis points, generating an operating margin percentage of 34% [12] Market Data and Key Metrics Changes - Preneed funeral sales production increased by $6 million or about 2% over the third quarter of 2024 [10] - Core preneed funeral sales production increased by $20 million or 9% [10] - Comparable cemetery preneed sales production grew by $30 million or almost 10% [12] Company Strategy and Development Direction - The company expects modest funeral revenue and gross profit growth compared to the fourth quarter of 2024 [14] - In the cemetery segment, low to mid single-digit cemetery preneed sales production growth is anticipated [14] - The company is focusing on leveraging its scale in field operations and overhead support functions to manage costs effectively [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving EPS growth within the long-term growth framework of 8% to 12% [15] - The company expects favorable trends in funeral volume, average sales, and cemetery sales, alongside lower interest rates [15] - Management noted that the pull forward effect on funeral volumes is expected to be negligible going forward, with demographics and backlog expected to drive future growth [13][15] Other Important Information - The company invested $140 million in the quarter into existing locations, new builds, and acquisitions [18] - A total of $123 million was returned to shareholders through dividends and share repurchases [20] - The company ended the quarter with liquidity of just under $1.5 billion [23] Q&A Session Summary Question: Discussion on cemetery preneed sales production and trends - Management noted strong velocity in cemetery preneed sales, with large sales up almost 19% over the prior year quarter, and expressed confidence in sustaining this trend into 2026 [26][29] Question: Confidence in achieving 8% to 12% EPS growth - Management indicated a historical assurance level of 85% to 90% for achieving the EPS growth target, emphasizing the importance of revenue growth [30][32] Question: Trends in cemetery sales and consumer education - Management expects cemetery sales to trend in low to mid single digits, with a focus on educating cremation consumers about available options [42][46] Question: Impact of the non-insured Flex product on sales - The non-insured Flex product was introduced to meet consumer needs in specific markets, although it generates lower commissions [67][71] Question: Expectations for SCI Direct sales production post-transition - Management anticipates growth in SCI Direct sales production in 2026, although it may not return to pre-transition levels for a couple of years [78][82]

Core Insights - The Federal Reserve cut interest rates by 25 basis points, marking the second cut this year, but investor sentiment remained low due to comments from Fed Chairman Jerome Powell regarding future rate cuts [1][5][10] Interest Rate Cut - The Federal Reserve's benchmark policy rate is now in the range of 3.75-4% following the quarter percentage point cut [5] - Powell indicated that while another rate cut in December is not ruled out, various factors need to be considered, leading to uncertainty among investors [6][8] Inflation and Labor Market - Inflation is nearing the Fed's 2% target, but concerns persist due to rising commodity prices influenced by tariffs [7] - The labor market is weakening, with fewer job additions, raising recession concerns, and the rate cut was primarily aimed at supporting this struggling market [8] Defensive Stock Recommendations - Defensive stocks from the utilities and consumer staples sectors are recommended to mitigate market volatility, including: - **Atmos Energy Corporation (ATO)**: Expected earnings growth of 8.1%, beta of 0.74, and dividend yield of 1.99% [9][10][11] - **CenterPoint Energy, Inc. (CNP)**: Expected earnings growth of 8.6%, beta of 0.57, and dividend yield of 2.23% [12][13] - **Duke Energy Corporation (DUK)**: Expected earnings growth of 7.3%, beta of 0.44, and dividend yield of 3.39% [14][15] - **Service Corporation International (SCI)**: Expected earnings growth of 8.8%, beta of 0.89, and dividend yield of 1.58% [16][17] Investment Strategy - The recommended investment strategy focuses on low-beta stocks with high dividend yields and favorable Zacks rankings to provide stability in a volatile market [4][10]