Given SEI Investments Co.’s SEIC solid assets under management (AUM) balance, and diversified product and revenue mix, it seems to be a wise idea to add the stock to your portfolio now. Moreover, rising demand for SEI Wealth Platform (“SWP”) and technological innovations will likely 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. The Zacks Consensus Estimate for current-year earnings has been revised upward by 2.9% over the past 30 days. Thus, the stock currently carries a Zacks Rank #1 (Strong Buy).
Looking at its price performance, shares of the company have gained 9% so far this year compared with the industry’s rally of 17.7%.
Given the strength in fundamentals, upward estimate revisions and top Zacks Rank, this price performance is likely to improve in the future.
Here are some other factors that make SEI Investments a solid investment option now:
Earnings per Share (EPS) Growth: The company’s earnings grew at a rate of 12.7% over the last three to five years, higher than the industry’s growth rate of 2.3%. Moreover, its earnings are projected to improve 1.3% in 2019 and 11.8% in 2020.
Further, the company’s long-term (three-five years) projected EPS growth rate of 12% promises reward for investors.
Revenue Strength: SEI Investments has been witnessing consistent improvement in revenues over the past few years. In the five-year period (ended 2018), the company’s revenues witnessed a CAGR of 6.4%. This rise was mainly driven by solid AUM growth. Notably, its total AUM witnessed a CAGR of 8.5% over the last three years (2016-2018).
Supported by the acquisition of Archway Technology Partners and strong assets balance, the company’s revenues are expected to improve further. Its projected sales growth rate of 2% and 5.7% for 2019 and 2020, respectively, ensures continuation of the upward trend in revenues.
Steady Capital Deployment Activities: SEI Investments continues to impress with its enhanced capital-deployment activities. In December 2018, the company hiked its semi-annual dividend by 10%. Also, it authorized an additional $250-million share buyback plan. Driven by a strong balance sheet position, the company is expected to continue deploying capital meaningfully and hence enhance shareholder value.
Strong Leverage: SEI Investments has a debt/equity ratio of 0.00, which suggests that the company does not use debt to finance its operations. On the other hand, the debt/equity ratio for the industry is currently 0.27. Thus, 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 29.76% compares favorably with the industry’s average of 13.22%. This implies its efficiency in using shareholders’ funds.
Other Stocks to Consider
Some other top-ranked stocks in the same space are Cohen & Steers, Inc. CNS, BlackRock, Inc. BLK and Franklin Resources, Inc. BEN. All these three stocks currently sport a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cohen & Steers has witnessed an upward earnings estimate revision of 6.9% for 2019 over the past 60 days. Its share price has risen 27.8% over the past six months.
Over the past 60 days, BlackRock’s Zacks Consensus Estimate for current-year earnings has been revised 5.9% upward. Its share price has increased 8.8% over the past six months.
Franklin Resources has witnessed an upward earnings estimate revision of 9.3% for fiscal 2019, over the past 60 days. Over the past six months, its share price is up 3.6%.
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