SEI Investments Co.’s SEIC fourth-quarter 2018 earnings of 73 cents per share were in line with the Zacks Consensus Estimate. Notably, the figure declined 3% from the prior-year quarter.
An increase in total revenues, partly offset by higher operating expenses, aided the company’s results. However, lower assets under management (AUM) were a concern.
Net income was $116 million, down 5% from the year-ago period.
For 2018, net income was $505.9 million or $3.14 per share compared with $404.4 million or $2.49 in the prior year.
Revenues Decline, Expenses Rise, AUM Falls
Total revenues were $405.1 million in the quarter, down 1% year over year. The decline reflected lower information processing and software servicing fees, partly offset by an increase in asset management, administration and distribution fees. However, the figure outpaced the Zacks Consensus Estimate of $403.1 million.
For 2018, total revenues were $1.6 billion, up 6.7% year over year. The figure was almost in line with the Zacks Consensus Estimate.
Total expenses during the reported quarter were $302.1 million, slightly up year over year. The rise was mainly due to higher compensation, benefits and other personnel costs, consulting, outsourcing and professional fees, data processing and computer-related fees along with depreciation and amortization costs. These increases were mostly offset by lower subadvisory, distribution and other asset management costs along with reduced software royalties and other information processing costs.
Operating income declined 4% year over year to $103 million.
As of Dec 31, 2018, AUM was $307.3 billion, reflecting a decline of 9.8% from the prior-year quarter. Total client AUM was $572.5 billion, increasing 10.4% year over year. Note that client AUM does not include $11 billion related to Funds of Funds assets that were reported on Dec 31, 2018.
Share Repurchase
In the reported quarter, SEI Investments bought back 2.3 million shares for $115.2 million.
Our Take
SEI Investments is well positioned for organic growth, given its innovative and diverse global investment products and services. Expected improving AUM will further enhance the company’s prospects. While mounting expenses and increased exposure toward fee-based revenues make us apprehensive, 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 carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of other asset managers
BlackRock, Inc. BLK posted fourth-quarter 2018 results. The company’s fourth-quarter 2018 adjusted earnings of $6.08 per share missed the Zacks Consensus Estimate of $6.39. Further, the figure was 2% lower than the year-ago tally.
Federated Investors, Inc. FII delivered a positive earnings surprise of 1.7% in fourth-quarter 2018. Earnings per share of 61 cents surpassed the Zacks Consensus Estimate of 60 cents. The figure, however, compared unfavorably with the prior-year quarter earnings of $1.31.
Cohen & Steers’ CNS fourth-quarter 2018 adjusted earnings were 56 cents per share, missing the Zacks Consensus Estimate of 60 cents. However, the bottom line was 1.8% higher than the year-ago quarter.
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