Earnings call transcript: Security National Financial Q3 2026 earnings fall as stock slips

Security National Financial Corp. released its Q3 2026 earnings report, revealing that earnings fell amid rising interest rates and lower mortgage activity. Diluted earnings per share declined to $0.23, with revenue of $79.94 million. The stock price dropped 4.32% to $9.07, and trading later settled at $8.93, representing a 1.54% decline from the prior close and leaving the equity below its $9.48 pre-earnings level.

Net earnings dropped to $6.2 million from $9 million in the previous quarter, as higher interest rates negatively impacted mortgage results. Stockholders' equity increased by 14.2% year-to-date, driven by reserve revaluations linked to higher rates, while cash and cash equivalents nearly doubled to $196 million, enhancing liquidity.

Mortgage originations fell to a 10-quarter low of $470 million, down from $9 million in the second quarter. Life insurance and cemetery operations demonstrated resilient performance, with sales in first-year life insurance and pre-need cemetery services both rising. Interest rates surged by 90 basis points during the quarter, causing a sharp decline in activity within the mortgage segment.

The insurance and cemetery divisions provided greater stability, with life insurance benefiting from stronger new sales and cemetery operations showing higher revenue and year-to-date profit growth.

Management highlighted a stronger capital base, with total assets reaching $1.62 billion and stockholders' equity hitting a record level for the quarter, up 14.2% year to date. The company emphasized that it is adjusting its mortgage operations while continuing to invest in growth areas such as reverse mortgages, home equity lines of credit (HELOCs), and new life insurance sales.

The company reported EPS of $0.23 and revenue of $79.94 million. No consensus earnings forecasts were provided, so a formal beat-or-miss comparison was not possible. Despite the earnings decline and weaker mortgage environment, the stock fell more than 4% immediately after the report and has since slipped further to $8.93, trading around 5.8% below its pre-earnings level of $9.48.

The market's reaction suggests investors are concerned about the earnings decline, mortgage pressure, and the increase in delinquent loans.

InvestingPro analysis indicates that the stock appears undervalued at current levels, with a Fair Value estimate above the current trading price, and the company is listed on the Most Undervalued stocks list. However, the market reaction also reflects a split view: while the balance sheet improved, the operating environment remains challenging.

Management outlined several priorities for upcoming quarters, including focusing on reverse mortgages, HELOCs, first-year life insurance sales growth, and continued investment in cemetery and mortuary operations. The company's stronger equity base and liquidity may help mitigate longer-term pressure.