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SEI Investments Co.’s (SEIC - Analyst Report) first-quarter 2013 earnings came in at 41 cents per share, surpassing the Zacks Consensus Estimate of 34 cents. Moreover, it surged 46.4% from the year-ago earnings of 28 cents.

The year-over-year improvement was aided by top-line growth, partially offset by higher expenses. Continued improvement in asset position and steady capital deployment activities were the other positives.

Net income attributable to common shareholders reached $71.9 million, rising 44% from $50.0 million in the prior-year quarter.

Behind the Headlines

Revenues at SEI grew 14.3% year over year to $271.9 million in the reported quarter. This marginally beat the Zacks Consensus Estimate of $271.0 million. The improvement was mainly attributable to a rise in asset management, administration and distribution fee revenues along with increases in information processing and software servicing fees.

Total expenses stood at $211.8 million, up 11.6% year over year. The rise was primarily due to higher expenses in software royalties and other information processing, brokerage commissions, compensation, benefits and other personnel, stock based compensation, consulting, outsourcing and professional, data processing and computer related costs, facilities, supplies, amortization, depreciation cost, and other costs, partially mitigated by a decline in sub-advisory, distribution and other asset management costs. However, interest expense came in at $0.1 million, down 29.8% year over year.

Operating income increased 24.9% year over year to $60.0 million.

Asset Position

As of Mar 31, 2013, assets under management rose 9.3% year over year and 2.3% sequentially to $206.2 billion. Total assets under administration as of that period were recorded at $494.8 billion, up 15.6% from $427.9 billion as of Mar 31, 2012 and 7.9% from $458.4 billion as of Dec 31, 2012.

Capital Deployment Activities

During the quarter, SEI repurchased 1.3 million shares of its common stock for $36.2 million.

Our Viewpoint

SEI’s increasing investments and growing need for risk management and alternative investment solutions within the financial service industry are expected to contribute positively to the company’s financials in the long run. Moreover, its sound capital deployment strategies are impressive. Further, the company’s robust asset inflows are expected to prove accretive to its overall growth going forward.

However, we remain apprehensive about the persisting low interest-rate environment, sluggish economic recovery and a stringent regulatory landscape.

Among other investment management companies, Lazard Ltd. (LAZ - Analyst Report) is scheduled to report its first-quarter 2013 earnings on Apr 26 while Franklin Resources Inc. (BEN - Analyst Report) will report its second-quarter 2013 earnings on Apr 30. Alongside, Legg Mason Inc. (LM - Analyst Report) is scheduled to report its fourth quarter and full-year 2013 earnings on Apr 30.

Currently, SEI carries a Zacks Rank #2 (Buy).
 

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