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Analyst Blog

SEI Investments Co. (SEIC - Analyst Report) recently increased its regular semi-annual dividend payout to 22 cents. This marks a 10% increase from the prior disbursement of 20 cents. The dividend will be paid on Jan 10, 2014 to shareholders of record as of Dec 23.

Along with the dividend hike, the company’s board of directors authorized an additional share buyback of $100 million, thereby increasing the current share repurchase authorization to $103 million. SEI Investments’ capital deployment activities seem impressive and are supported by the company’s strong balance sheet and ability to grow earnings.

On Oct 24, SEI Investment reported strong third-quarter 2013 earnings, which beat the Zacks Consensus Estimate by 11.8%. Results were driven by top-line growth, partially offset by higher operating expenses. All the business segments, excepting Investment in New Business, generated positive operating margin.

Moreover, cash and cash equivalents were $527.2 million, up 8.2% from the prior quarter, and total assets were $1.4 billion, rising 3.3% over the same time frame.

In the recent times, the global economy has undergone a lot of upheaval. Though the scenario has now improved to a large extent, the volatile equity market keeps investors skeptical. It has been observed that due to changing investor sentiment, risk management and alternate investment solutions are gaining popularity, thereby benefiting investment managers like SEI Investments.

However, SEI Investments missed the Zacks Consensus Estimate in 2 out of the 4 trailing quarters, and this questions the sustainability of the company’s recent earnings beat. Further, the sluggish economic recovery and stringent regulatory requirements are concerns.

SEI Investments currently carries a Zacks Rank #2 (Buy). Some better-ranked investor managers include Artisan Partners Asset Management Inc. (APAM - Snapshot Report), Kohlberg Kravis Roberts & Co. L.P. (KKR - Snapshot Report) and Waddell & Reed Financial, Inc. (WDR - Analyst Report). All these stocks carry a Zacks Rank #1 (Strong Buy).

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