SEI Investments Co.’s (SEIC) healthy liquidity position and its consistent efforts to enhance shareholders’ value are encouraging. Moreover, the stock closed at $34.71 on Dec 27, reflecting a year-to-date return of 45.3%.
Going forward, SEI Investments’ strong global presence and robust asset inflows will help bolster profitability. Hence, you may continue to hold the stock in your portfolio. However, given the persistent rise in expenses and significant dependence on fee-based revenues, we discourage further addition of its shares to your portfolio.
Justifying the Stance
SEI Investments’ third-quarter 2013 earnings outpaced the Zacks Consensus Estimate. Also, the company’s broad diversification and organic growth prospects continue to be catalysts in the prevalent sluggish economic environment.
Moreover, SEI Investments is a sound asset for yield-seeking investors, given its active capital deployment activities. Buoyed by its strong financial performance and earnings growth, the company remains committed to enhancing shareholders’ value.
However, rise in operating expenses remains a concern for SEI Investments. Moreover, given the company’s continuation in building its operational infrastructure, a decline in expenses is unlikely in the near future. Additionally, high dependence on fee-based revenues might weigh on SEI Investments’ financials as volatile markets, regulatory changes or a sudden slowdown in overall business activities could hurt assets under management growth.
Additionally, in line with our analysis, the Zacks Consensus Estimate underwent no revision in the last 60 days. While the Zacks Consensus Estimate for 2013 is $1.39, for 2014 it is $1.67. Hence, SEI Investments’ now has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked investment mangers worth a look include Artisan Partners Asset Management Inc. (APAM), Brookfield Asset Management Inc. (BAM) and Waddell & Reed Financial, Inc. (WDR). All these stocks carry a Zacks Rank #1 (Strong Buy).