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SEI Investments (SEIC) Lags on Q1 Earnings as Costs Increase

Zacks Equity Research

SEI Investments Co.’s SEIC first-quarter 2019 earnings of 73 cents per share lagged the Zacks Consensus Estimate of 76 cents. The figure reflected a decline of 15.1% from the prior-year quarter.

Results were primarily hurt by a decline in revenues along with higher expenses. Moreover, lower assets under management (AUM) were a concern.

Net income was $114 million, down from $139.8 million recorded in the year-ago period.

Revenues & AUM Decline, Expenses Rise

Total revenues were $400.8 million, down 1.2% year over year. This decline reflected lower information processing and software servicing fees along with lower asset management, administration and distribution fees. The figure missed the Zacks Consensus Estimate of $403.2 million.

Total expenses during the reported quarter were $297.3 million, up 2.8% year over year. This rise was due to an increase in almost all components except for stock-based compensation, software royalties and other information processing costs, and subadvisory, distribution and other asset management costs.

Operating income declined 11% year over year to $103.6 million.

As of Mar 31, 2019, AUM was $331.7 billion, reflecting a decline of nearly 1% from the prior-year quarter. Client assets under administration (AUA) were $608.9 billion, increasing 14.9% year over year. Note that client AUA does not include $11.4 billion related to Funds of Funds assets that were reported on Mar 31, 2019.

Share Repurchase

In the reported quarter, SEI Investments bought back 1.7 million shares for $88.8 million.

Our Take

SEI Investments is well positioned for organic growth, given its innovative and diverse global investment products and services. Moreover, solid AUM balance and rising demand for SEI Wealth Platform (“SWP”) will likely boost its revenue prospects. Further, the company's efficient capital deployment activities indicate a solid capital position.

SEI Investments Company Price, Consensus and EPS Surprise

SEI Investments Company Price, Consensus and EPS Surprise | SEI Investments Company Quote

Currently, SEI Investments sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance & Earnings Release Date of Other Asset Managers

BlackRock, Inc.’s BLK first-quarter 2019 adjusted earnings of $6.61 per share surpassed the Zacks Consensus Estimate of $6.20. However, the figure was 1.3% lower than the year-ago quarter.

Cohen & Steers’ CNS first-quarter 2019 adjusted earnings were 58 cents per share, missing the Zacks Consensus Estimate by a penny. Also, the bottom line was 6.5% lower than the year-ago quarter figure.

Franklin Resources, Inc. BEN is slated to release quarterly results tomorrow.

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