5 Reasons to Add SEI Investments (SEIC) Stock to Your Portfolio
It seems to be a wise idea to add the SEI Investments SEIC stock to your portfolio now. The company’s solid assets under management (AUM) balance, strategic buyouts and diverse product offerings are expected to keep supporting top-line growth. Technological innovations and rising demand for the SEI Wealth Platform (“SWP”) will likely further aid growth.
Analysts seem optimistic regarding the company’s earnings growth potential. Over the past 60 days, the Zacks Consensus Estimate for SEIC’s 2024 earnings has been revised 3.7% upward. The company currently carries a Zacks Rank #2 (Buy).
Looking at its price performance, SEIC shares have gained 14% over the past six months compared with the industry’s 21% growth.
Image Source: Zacks Investment Research
Some other factors mentioned below make the SEIC stock a viable investment option now.
Earnings Per Share (EPS) Growth: The company’s earnings have witnessed growth of 4.1% over the past three-five years. The upward trend is expected to continue in the near term. In 2024 and 2025, the company’s earnings are projected to grow 14.7% and 7.6%, respectively.
SEI Investments’ long-term (three-five years) projected EPS growth rate of 12% promises rewards for investors.
Revenue Strength: Supported by a robust AUM balance, SEIC’s revenues witnessed a compound annual growth rate (CAGR) of 3.4% over the last five years (2018-2023). Over the same period, total assets under management, advisement and administration saw a CAGR of 9.7%.
SEI Investments' top line is expected to keep improving, driven by its diversified products and revenue mix, a strong global presence, the acquisition of Atlas Master Trust (November 2021), and a solid AUM balance.
Revenues are projected to increase 6.3% in 2024 and 5% in 2025.
Technological Advancements: Technology is the backbone of SEI Investments’ businesses. The company’s primary business platform — Investment Processing — delivers its outsourced software and processing services through TRUST 3000 and the SWP.
Revenues generated by these two are recognized under information processing and software servicing fees. While the metric recorded a decline in 2019, 2020 and 2023, it witnessed a CAGR of 2.7% over the five years ended 2023.
Notably, the acquisitions of Oranj's cloud-native technology platform, Finomial and Novus support SEIC’s technological advancement efforts. The company is taking several initiatives to enhance technology to support advisors. These initiatives and constant innovations in software will likely help SEI Investments win clients and further support its top-line growth.
Efficient Capital Distribution Activities: SEI Investments continues to impress with its enhanced capital distributions. In December 2023, the company hiked its semi-annual dividend by 7%, following a 7.5% hike in December 2022. Moreover, it increased its buyback authorization by $250 million. As of Dec 31, 2023, $282.1 million worth of authorization was available.
Given the robust capital position, the company is expected to sustain efficient capital distribution activities, thereby continuing to enhance shareholder value.
Superior Return on Equity (ROE): SEI Investments’ ROE indicates growth potential. Its current ROE of 22.40% compares favorably with the industry’s average of 14.02%. This indicates that it utilizes shareholders’ funds more efficiently than peers.
Other Stocks to Consider
A couple of other top-ranked stocks from the same industry are T. Rowe Price Group, Inc. TROW and Artisan Partners Asset Management Inc. APAM, both carrying a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TROW’s current-year earnings has been revised 9% upward over the past 60 days. In the past year, TROW shares have rallied 10.3%.
The Zacks Consensus Estimate for APAM’s 2024 earnings has been revised 5.5% upward over the past 60 days. APAM shares have rallied 47.4% in the past 12 months.
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T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report
SEI Investments Company (SEIC) : Free Stock Analysis Report
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