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SEI Investments (SEIC) Beats on Q3 Earnings, AUM Improves

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SEI Investments Co.’s (SEIC - Free Report) third-quarter 2018 earnings of 80 cents per share surpassed the Zacks Consensus Estimate of 77 cents. Moreover, the figure grew 27% from the prior-year quarter.

An increase in total revenues, partly offset by higher operating expenses, aided the company’s results. Further, assets under management (AUM) witnessed growth.

Net income was $128.3 million, increasing 26% from the year-ago period.

Revenues and AUM Improve, Expenses Rise

Total revenues were $408.7 million, increasing 6% year over year. The rise reflected an increase in asset management, administration and distribution fees as well as information processing and software servicing fees. However, the figure lagged the Zacks Consensus Estimate of $409.4 million.

Total expenses during the reported quarter were $296.3 million, increasing 3% 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 costs.

Operating income increased 13% year over year to $112.4 million.

As of Sep 30, 2018, AUM was $339.2 billion, reflecting an increase of 4% from the prior-year quarter. Total client AUM was $575.8 billion, increasing 12% year over year. Note that client AUM does not include $10.1 billion related to Funds of Funds assets that were reported on Sep 30, 2018.

Share Repurchase

In the reported quarter, SEI Investments bought back 1.7 million shares for $102.6 million.

Our Take

SEI Investments is well positioned for organic growth, given its innovative and diverse global investment products and services. Improving AUM will further bolster the company’s growth 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 #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Asset Managers

BlackRock’s (BLK - Free Report) third-quarter 2018 adjusted earnings of $7.52 per share outpaced the Zacks Consensus Estimate of $6.93. Results benefited from an improvement in revenues, rise in AUM and steady long-term inflows. The uptick in operating expenses was a dampening factor.

The Blackstone Group L.P. (BX - Free Report) reported third-quarter 2018 economic net income (ENI) of 76 cents per share, which surpassed the Zacks Consensus Estimate of 73 cents. Results benefited from increase in revenues, which was supported by growth in AUM and inflows.

Invesco Ltd. (IVZ - Free Report) reported third-quarter 2018 adjusted earnings of 66 cents per share, lagging the Zacks Consensus Estimate by a penny. Results were primarily supported by slight revenue growth and rise in AUM. However, increase in operating expenses was an undermining factor.

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