5 Reasons to Invest in SEI Investments (SEIC) Stock Right Now
SEI Investments SEIC stock looks like an attractive investment option now. The company’s solid assets under management (AUM) balance, strategic buyouts and diverse range of product offerings are expected to keep supporting the top line. 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 2023 earnings has been revised 1.2% upward. The stock currently carries a Zacks Rank #2 (Buy).
Looking at its price performance, shares of SEIC have gained 8% over the past year compared with the industry’s 14.5% growth.
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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 6.4% over the past three-five years. While earnings are projected to decline 1.2% in 2023 amid a tough operating backdrop, the trend will likely reverse after that. In 2024, the company’s earnings are projected to rise 13.1%.
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 5.5% over the last five years (2017-2022). Over the same period, AUM saw a CAGR of 3.2%, with the momentum continuing in the first quarter of 2023.
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.
While revenues are projected to decline 3.3% in 2023, the same will rise 5.2% in 2024.
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 the first quarter of 2023, it witnessed a CAGR of 6.9% over the five years ended 2022.
SEIC’s strategic acquisitions of Oranj's cloud-native technology platform, Finomial and Novus, support its technological advancement efforts. The company launched two key technology enhancements through the SWP — Digital Account Open and Digital Model Management, which are available to independent advisors. In 2022, it launched SEI Data Cloud through a strategic partnership with Snowflake to address the financial services industry’s demand for more advanced data integration.
These initiatives and constant innovations in software will likely help SEI Investments win new clients and, thus, support top-line growth.
Efficient Capital Deployment Activities: SEI Investments continues to impress with its enhanced capital deployments. In December 2022, the company hiked its semi-annual dividend by 7.5%. It also has a share repurchase plan in place. In April, it increased its buyback authorization by $250 million. As of Apr 18, 2023, $262.5 million worth of shares were left to be repurchased.
Given the robust capital position, the company is expected to sustain its capital deployment activities, thereby continuing to enhance shareholder value.
Superior Return on Equity (ROE): SEI Investments’ ROE indicates growth potential. Its current ROE of 22.29% compares favorably with the industry’s average of 12.69%. 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 Capital Southwest Corporation CSWC and Artisan Partners Asset Management Inc. APAM, carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CSWC’s current fiscal-year earnings has been revised 2% upward over the past 60 days. In the past year, CSWC’s shares have rallied 5.3%.
The Zacks Consensus Estimate for APAM’s 2023 earnings has been revised 2.2% upward over the past 60 days. APAM’s shares have rallied 4.4% in the past 12 months.
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SEI Investments Company (SEIC) : Free Stock Analysis Report
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