SEI Investments Co. SEIC boasts a diversified product and revenue mix as well as a strong global presence. Its acquisition of Archway Technology Partners reflects improving prospects in the next few quarters.
A positive trend in estimate revisions reflect optimism over the company’s earnings growth prospects. The company has seen the Zacks Consensus Estimate for its current-quarter earnings being revised upward over the last 90 days by a cent. Also, the current-year’s earnings estimates have climbed 2.6%. As a result, the stock currently carries a Zacks Rank #2 (Buy).
Also, its shares have gained 45.5% over the last 12 months, widely outperforming the industry’s rally of 35.4%.
Why SEI Investments is a Solid Pick?
Earnings Strength: SEI Investments recorded an earnings growth rate of 14.2% over the last three to five years compared with 3.5% for the industry it belongs to. The earnings growth rate for the current and the next year is anticipated to be 16.3% and 15%, respectively.
Further, the company has an impressive earnings surprise history, having outpaced the Zacks Consensus Estimate consistently in each of the trailing four quarters at an average of 7%. It also has a Growth Score of B. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
Revenue Growth: SEI Investments has been witnessing consistent improvement in revenues for the past few years. Over the last five years (2012-2016), the company’s revenues witnessed a CAGR of 9%. Its projected sales growth of 8.1% and 9.1% for 2017 and 2018, respectively, ensures continuation of the upward trend in top line.
Robust Asset Base: Asset inflows at SEI Investments remain strong. The company witnessed a rising trend in its total assets under management and administration over the last four years at a CAGR of 10.3% (2011-2015). Though the overall equity market remains volatile, this investment manager is well positioned to benefit from the same.
Steady Capital Deployment: SEI Investments continues to impress with its enhanced capital deployment activities. In October, the company authorized an additional $200 million share buyback plan, thus increasing repurchase authorization to $230.5 million. In December 2016, the company increased its semi-annual dividend by 7%. Driven by a strong balance sheet position, the company is expected to continue deploying capital meaningfully.
Strong Leverage: SEI Investments has a debt/equity ratio of 0.03 compared with the industry’s average of 0.08. This reflects the relatively strong financial health of the company, which will help it perform better than its peers under a dynamic business environment.
Favorable ROE: SEI Investments’ return on equity (ROE) supports its growth potential. Its ROE of 27.12% compares favorably with the industry’s average ROE of 13.08%, implying its efficiency in using shareholders’ funds.
Other Stocks to Consider
Some other stocks in the same space worth considering are Ameriprise Financial, Inc. AMP, BlackRock, Inc. BLK and Federated Investors, Inc. FII, each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ameriprise has witnessed an upward earnings estimate revision of 5.9% for 2017, over the past 30 days. Its share price has risen 75%, over the past 12 months.
For BlackRock, over the past 30 days, its Zacks Consensus Estimate has been revised 1.1% upward for 2017. Its share price has increased 33.9% over the past 12 months.
Federated Investors has witnessed an upward earnings estimate revision of 2.9% for 2017, over the past 30 days. Over the past 12 months, its share price is up 24.8%.
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