It seems to be a wise idea to add SEI Investments Co. SEIC stock to your portfolio now. The company’s solid assets under management (AUM) balance, and diversified product and revenue mix will likely aid financials. Moreover, rising demand for the SEI Wealth Platform (“SWP”) and technological innovations are expected to boost its revenue prospects.
The company has been witnessing upward earnings estimate revisions of late, indicating that analysts are optimistic regarding its earnings growth potential. Its Zacks Consensus Estimate for current-year earnings has been revised 1.3% upward over the past 60 days. Thus, the stock currently carries a Zacks Rank #2 (Buy).
Looking at its price performance, shares of the company have gained 21.5% so far this year compared with the industry’s rally of 8%.
Given the strength in fundamentals, upward estimate revisions and solid Zacks Rank, the stock is expected to gain further.
Here are some other factors that make SEI Investments a solid investment option now:
Earnings per Share (EPS) Growth: The company’s earnings improved at a rate of 12.9% over the last three to five years, higher than the industry’s growth rate of 5.7%. Moreover, its earnings are projected to rise 2.6% in 2019 and 11.7% in 2020.
Further, the company’s long-term (three-five years) projected EPS growth rate of 12% promises reward for investors.
Revenue Strength: Driven by continued growth in assets, SEI Investments’ revenues witnessed a CAGR of 6.4% over the last five years (2014-2018). Notably, its total AUM witnessed a CAGR of 8.5% over the last three years (2016-2018).
Supported by the company’s diversified product mix, strong global presence, the acquisition of Archway Technology Partners and strong assets balance, its revenues are expected to improve further. In fact, its projected sales growth rate of 1.5% for 2019 and 5.6% for 2020 ensures continuation of the upward trend in revenues.
Efficient Capital Deployment Activities: SEI Investments continues to impress with its enhanced capital deployments. In December 2018, the company hiked its semi-annual dividend by 10%. Moreover, it has a share buyback plan in place. In July 2019, it increased its repurchase authorization by $250 million. As a result, the current authorization available under the company’s share buyback plan is $280 million. Thus, driven by strong balance sheet position, the company is expected to continue deploying capital meaningfully and hence enhance shareholder value.
Strong Leverage: SEI Investments currently has a debt/equity ratio of 0.02, lower than the industry’s debt/equity ratio of 0.55. This suggests that the company will likely perform better than its peers under a dynamic business environment.
Superior Return on Equity (ROE): SEI Investments’ ROE supports its growth potential. Its current ROE of 29.86% compares favorably with the industry’s average of 13.24%. This implies its efficiency in using shareholders’ funds.
Other Stocks to Consider
Some other top-ranked stocks in the same space are T. Rowe Price Group, Inc. TROW, Victory Capital Holdings, Inc. VCTR and AllianceBernstein Holding L.P. AB.
Over the past 60 days, T. Rowe Price’s Zacks Consensus Estimate for current-year earnings has been revised 3.6% upward. Its share price has increased 16.7% year to date. The stock currently sports a Zacks Rank #1 (Strong Buy).
Victory Capital has witnessed an upward earnings estimate revision of 5% for 2019 over the past 60 days. So far this year, the company’s share price has increased 48.6%. The stock sports a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
AllianceBernstein has witnessed an upward earnings estimate revision of 2.1% for 2019 over the past 60 days. Its share price has risen 3.9% so far this year. The stock currently carries a Zacks Rank of 2.
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