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SEI Investments (SEIC) Beats on Q1 Earnings, AUM Improves
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SEI Investments Co.’s (SEIC - Free Report) first-quarter 2018 earnings of 86 cents per share surpassed the Zacks Consensus Estimate of 77 cents. Also, the figure compared favorably with the prior-year quarter earnings of 55 cents.
An increase in total revenues, partly offset by higher operating expenses, aided the company’s results during the reported quarter. Moreover, growth in assets under management (AUM) remained strong.
Net income for the quarter was $139.8 million, increasing 57.6% from the year-ago period.
Revenues and AUM Improve, Expenses Rise
Total revenues for the quarter were $405.6 million, increasing 12.7% year over year. The rise reflected an increase in asset management, administration and distribution fees as well as information processing and software servicing fees.
Total expenses during the quarter were $289.3 million, increasing 8.6% year over year. The rise was due to higher compensation, benefits and other personnel costs, subadvisory, distribution and other asset management costs, consulting, outsourcing and professional fees, data processing and computer-related fees along with facilities, supplies and other costs.
Operating income increased 24.4% year over year to $116.3 million.
As of Mar 31, 2018, AUM was $334.71 billion, reflecting an increase of 12.7% from the prior-year quarter. Total client AUM was $530.11 billion, increasing 10.9% year over year. Note that client AUM does not include $9.7 billion related to Funds of Funds assets that were reported on Mar 31, 2018.
Share Repurchase
In the reported quarter, SEI Investments bought back 1.1 million shares for $82.3 million.
Our Take
SEI Investments’ continuously mounting expenses remain a big concern. It expects expenses to continue rising due to additional investment spending on services. Further, its increased exposure to fee-based revenues makes us apprehensive. Yet, the company’s innovative and diverse global investment products and services position it well to grow organically.
SEI Investments Company Price, Consensus and EPS Surprise
Ameriprise Financial Inc.’s (AMP - Free Report) first-quarter 2018 adjusted operating earnings per share of $3.70 comfortably surpassed the Zacks Consensus Estimate of $3.47. Results benefited from an improvement in revenues. Also, growth in AUM and assets under administration (AUA) supported the earnings. However, rise in expenses remains a concern.
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2018 adjusted earnings were $6.70 per share, outpacing the Zacks Consensus Estimate of $6.42. Results benefited from an improvement in revenues, rise in AUM and steady long-term inflows. However, increase in operating expenses acted as a headwind.
The Blackstone Group L.P. (BX - Free Report) reported first-quarter 2018 economic net income of 65 cents per share, surpassing the Zacks Consensus Estimate of 46 cents. The quarter saw an improvement in AUM, mainly driven by inflows. However, lower revenues and rise in expenses were the major deterrents.
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SEI Investments (SEIC) Beats on Q1 Earnings, AUM Improves
SEI Investments Co.’s (SEIC - Free Report) first-quarter 2018 earnings of 86 cents per share surpassed the Zacks Consensus Estimate of 77 cents. Also, the figure compared favorably with the prior-year quarter earnings of 55 cents.
An increase in total revenues, partly offset by higher operating expenses, aided the company’s results during the reported quarter. Moreover, growth in assets under management (AUM) remained strong.
Net income for the quarter was $139.8 million, increasing 57.6% from the year-ago period.
Revenues and AUM Improve, Expenses Rise
Total revenues for the quarter were $405.6 million, increasing 12.7% year over year. The rise reflected an increase in asset management, administration and distribution fees as well as information processing and software servicing fees.
Total expenses during the quarter were $289.3 million, increasing 8.6% year over year. The rise was due to higher compensation, benefits and other personnel costs, subadvisory, distribution and other asset management costs, consulting, outsourcing and professional fees, data processing and computer-related fees along with facilities, supplies and other costs.
Operating income increased 24.4% year over year to $116.3 million.
As of Mar 31, 2018, AUM was $334.71 billion, reflecting an increase of 12.7% from the prior-year quarter. Total client AUM was $530.11 billion, increasing 10.9% year over year. Note that client AUM does not include $9.7 billion related to Funds of Funds assets that were reported on Mar 31, 2018.
Share Repurchase
In the reported quarter, SEI Investments bought back 1.1 million shares for $82.3 million.
Our Take
SEI Investments’ continuously mounting expenses remain a big concern. It expects expenses to continue rising due to additional investment spending on services. Further, its increased exposure to fee-based revenues makes us apprehensive. Yet, the company’s innovative and diverse global investment products and services position it well to grow organically.
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
Ameriprise Financial Inc.’s (AMP - Free Report) first-quarter 2018 adjusted operating earnings per share of $3.70 comfortably surpassed the Zacks Consensus Estimate of $3.47. Results benefited from an improvement in revenues. Also, growth in AUM and assets under administration (AUA) supported the earnings. However, rise in expenses remains a concern.
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2018 adjusted earnings were $6.70 per share, outpacing the Zacks Consensus Estimate of $6.42. Results benefited from an improvement in revenues, rise in AUM and steady long-term inflows. However, increase in operating expenses acted as a headwind.
The Blackstone Group L.P. (BX - Free Report) reported first-quarter 2018 economic net income of 65 cents per share, surpassing the Zacks Consensus Estimate of 46 cents. The quarter saw an improvement in AUM, mainly driven by inflows. However, lower revenues and rise in expenses were the major deterrents.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>