A month has gone by since the last earnings report for SEI Investments (SEIC). Shares have added about 6.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is SEI due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
SEI Investments Q1 Earnings Lag Estimates, AUM Declines
SEI Investments’ first-quarter 2020 earnings of 72 cents per share lagged the Zacks Consensus Estimate of 77 cents. Moreover, the figure reflects a decline of 1.4% from the prior-year quarter.
Results were primarily hurt by a rise in expenses. Moreover, a decline in AUM balance was a headwind. Nevertheless, higher revenues supported results to some extent.
Net income was $109.2 million, down 4.2% from the year-ago quarter.
Revenues & Expenses Rise, AUM Falls
Total revenues were $414.8 million, up 3.5% year over year. The rise reflected higher asset management, administration and distribution fees. Moreover, the reported figure surpassed the Zacks Consensus Estimate of $410.8 million.
Total expenses were $304.5 million, up 2.4% year over year. The rise was due to an increase in almost all components of expenses, except for facilities, supplies and other costs, and software royalties and other information processing costs.
Operating income increased 6.4% year over year to $110.2 million.
As of Mar 31, 2020, AUM was $283.4 billion, reflecting a decline of 14.6% from the prior-year quarter. Client assets under administration (AUA) were $632.3 billion, up 3.8% year over year. Note that client AUA does not include $11.5 billion related to Funds of Funds assets that were reported on Mar 31, 2020.
In the reported quarter, SEI Investments bought back 2.4 million shares for $127.4 million.
In 2020, management expects remaining capital expenditures excluding capitalized software of $30 million, which includes $15 million related to the facility expansion.
How Have Estimates Been Moving Since Then?
Estimates revision followed a downward path over the past two months. The consensus estimate has shifted -7.66% due to these changes.
Currently, SEI has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
SEI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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