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SEI Investments (SEIC) Tanks Over 10% on Q2 Earnings Miss
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Shares of SEI Investments Co. (SEIC - Free Report) declined 10.5% following the release of its second-quarter 2016 results before the market opened yesterday. Earnings of 49 cents lagged the Zacks Consensus Estimate by a penny. Further, the bottom line declined 3.9% from 51 cents in the year-ago quarter.
Higher expenses, which were partially offset by an increase in revenues, were primarily responsible for this earnings miss. Nonetheless, the company's asset position reflected consistent improvement.
Net income was $81 million, down 6% from the year-ago quarter.
Revenues at SEI Investments grew 2% year over year to $343.8 million. The improvement was mainly driven by an increase in asset management, administration and distribution fees as well as elevated cash flows, partially offset by increased market volatility. However, the figure lagged the Zacks Consensus Estimate of $347 million.
Total expenses amounted to $250.3 million, up 3.5% year over year. Components other than sub-advisory, distribution & other asset management costs, software royalties & other information processing costs and brokerage commissions recorded a rise.
Operating income declined 2.5% year over year to $93.5 million.
As of Jun 30, 2016, assets under management (AUM) rose 2.8% year over year to $269.3 billion. Total client AUM was recorded at $437.7 billion, up 9.6% year over year.
Share Repurchase
In the reported quarter, SEI Investments bought back 1.5 million shares of its common stock for $73.5 million.
Our Take
SEI Investments, backed by its global investment products and services, will be able to continue generating revenues in the coming quarters. Moreover, robust asset inflows are expected to be accretive to the company’s overall growth.
The company’s capital deployment activities remain impressive, but its high dependence on fee-based revenues and weak expense management, along with a stringent regulatory landscape will likely weigh on its profitability in the quarters ahead.
Currently, SEI Investments has a Zacks Rank #3 (Hold).
Performance of Other Investment Managers
Waddell & Reed Financial Inc. reported second-quarter 2016 adjusted earnings of 59 cents per share, surpassing the Zacks Consensus Estimate of 48 cents. Better-than-expected results were primarily driven by lower expenses. However, a decline in revenues, elevated outflows and deteriorating assets under management were the undermining factors.
The Blackstone Group L.P. (BX - Free Report) reported second-quarter 2016 economic net income of 44 cents per share, which surpassed the Zacks Consensus Estimate of 40 cents. Better-than-expected results were attributable to a significant decline in expenses and higher total investment income, partially offset by lower performance fees. Also, growth in assets under management continued to be impressive.
Ameriprise Financial Inc. (AMP - Free Report) reported second-quarter 2016 operating earnings per share of $2.23, missing the Zacks Consensus Estimate of $2.27. The results came in lower than expected primarily due to a drop in revenues. However, a decline in operating expenses and increase in assets under management and assets under administration were on the positive side.
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SEI Investments (SEIC) Tanks Over 10% on Q2 Earnings Miss
Shares of SEI Investments Co. (SEIC - Free Report) declined 10.5% following the release of its second-quarter 2016 results before the market opened yesterday. Earnings of 49 cents lagged the Zacks Consensus Estimate by a penny. Further, the bottom line declined 3.9% from 51 cents in the year-ago quarter.
Higher expenses, which were partially offset by an increase in revenues, were primarily responsible for this earnings miss. Nonetheless, the company's asset position reflected consistent improvement.
Net income was $81 million, down 6% from the year-ago quarter.
Revenues, Expenses and AUM Depict an Uptrend
Revenues at SEI Investments grew 2% year over year to $343.8 million. The improvement was mainly driven by an increase in asset management, administration and distribution fees as well as elevated cash flows, partially offset by increased market volatility. However, the figure lagged the Zacks Consensus Estimate of $347 million.
Total expenses amounted to $250.3 million, up 3.5% year over year. Components other than sub-advisory, distribution & other asset management costs, software royalties & other information processing costs and brokerage commissions recorded a rise.
Operating income declined 2.5% year over year to $93.5 million.
As of Jun 30, 2016, assets under management (AUM) rose 2.8% year over year to $269.3 billion. Total client AUM was recorded at $437.7 billion, up 9.6% year over year.
Share Repurchase
In the reported quarter, SEI Investments bought back 1.5 million shares of its common stock for $73.5 million.
Our Take
SEI Investments, backed by its global investment products and services, will be able to continue generating revenues in the coming quarters. Moreover, robust asset inflows are expected to be accretive to the company’s overall growth.
The company’s capital deployment activities remain impressive, but its high dependence on fee-based revenues and weak expense management, along with a stringent regulatory landscape will likely weigh on its profitability in the quarters ahead.
SEI INVESTMENTS Price, Consensus and EPS Surprise
SEI INVESTMENTS Price, Consensus and EPS Surprise | SEI INVESTMENTS Quote
Currently, SEI Investments has a Zacks Rank #3 (Hold).
Performance of Other Investment Managers
Waddell & Reed Financial Inc. reported second-quarter 2016 adjusted earnings of 59 cents per share, surpassing the Zacks Consensus Estimate of 48 cents. Better-than-expected results were primarily driven by lower expenses. However, a decline in revenues, elevated outflows and deteriorating assets under management were the undermining factors.
The Blackstone Group L.P. (BX - Free Report) reported second-quarter 2016 economic net income of 44 cents per share, which surpassed the Zacks Consensus Estimate of 40 cents. Better-than-expected results were attributable to a significant decline in expenses and higher total investment income, partially offset by lower performance fees. Also, growth in assets under management continued to be impressive.
Ameriprise Financial Inc. (AMP - Free Report) reported second-quarter 2016 operating earnings per share of $2.23, missing the Zacks Consensus Estimate of $2.27. The results came in lower than expected primarily due to a drop in revenues. However, a decline in operating expenses and increase in assets under management and assets under administration were on the positive side.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>