Understanding SEI Investments Co’s (NASDAQ:SEIC) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how SEI Investments is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. View our latest analysis for SEI Investments
Were SEIC’s earnings stronger than its past performances and the industry?
I look at the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to examine many different companies on a similar basis, using the most relevant data points. SEI Investments’s latest earnings is $371M, which, in comparison to the previous year’s figure, has risen by 13.56%. Given that these values are somewhat short-term, I have calculated an annualized five-year figure for SEI Investments’s earnings, which stands at $281M. This means that, on average, SEI Investments has been able to consistently improve its bottom line over the last couple of years as well.
What’s enabled this growth? Let’s take a look at whether it is merely due to an industry uplift, or if SEI Investments has experienced some company-specific growth. In the past few years, SEI Investments increased its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Scanning growth from a sector-level, the US capital markets industry has been growing its average earnings by double-digit 18.45% in the past year, and 10.78% over the past couple of years. This suggests that whatever tailwind the industry is benefiting from, SEI Investments has not been able to leverage it as much as its average peer.
What does this mean?
Though SEI Investments’s past data is helpful, it is only one aspect of my investment thesis. While SEI Investments has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research SEI Investments to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SEIC’s future growth? Take a look at our free research report of analyst consensus for SEIC’s outlook.
2. Financial Health: Is SEIC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.