Let’s dig into the relative performance of Service International (NYSE:SCI) and its peers as we unravel the now-completed Q2 consumer discretionary – specialized consumer services earnings season.
The Consumer Discretionary sector, by definition, is made up of companies selling non-essential goods and services. When economic conditions deteriorate or tastes shift, consumers can easily cut back or eliminate these purchases. For long-term investors with five-year holding periods, this creates a structural challenge: the sector is inherently hit-driven, with low switching costs and fickle customers. As a result, only a handful of companies can reliably grow demand and compound earnings over long periods, which is why our bar is high and High Quality ratings are rare.Some consumer discretionary companies don’t fall neatly into a category because their products or services are unique. Although their offerings may be niche, these companies have often found more efficient or technology-enabled ways of doing or selling something that has existed for a while. Technology can be a double-edged sword, though, as it may lower the barriers to entry for new competitors and allow them to serve customers better.
The 10 consumer discretionary – specialized consumer services stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was 1% above.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 13.8% since the latest earnings results.
Service International (NYSE:SCI)
Founded in 1962, Service International (NYSE: SCI) is a leading provider of death care products and services in North America.
Service International reported revenues of $1.10 billion, up 3.6% year on year. This print exceeded analysts’ expectations by 1.8%. Overall, it was a satisfactory quarter for the company with full-year EPS guidance topping analysts’ expectations.
Even though it had a relatively good quarter, the market seems discontent with the results. The stock is down 9.7% since reporting and currently trades at $77.39.
Is now the time to buy Service International? Access our full analysis of the earnings results here, it’s free.
Best Q2: H&R Block (NYSE:HRB)
Founded in 1955 by brothers Henry W. Bloch and Richard A. Bloch, H&R Block (NYSE:HRB) is a tax preparation company offering professional tax assistance and financial solutions to individuals and small businesses.
H&R Block reported revenues of $1.14 billion, up 3% year on year, outperforming analysts’ expectations by 2.5%. The business had a very strong quarter with full-year revenue guidance beating analysts’ expectations and full-year EBITDA guidance beating analysts’ expectations.
