It seems to be a wise idea to add SEI Investments (SEIC - Free Report) stock to your investment portfolio now. The company’s solid assets under management (AUM) balance, and diversified product and revenue mix will likely aid financials. Rising demand for the SEI Wealth Platform and technological innovations are expected to further boost its revenues.
The Zacks Consensus Estimate for earnings has been unchanged over the past seven days. The stock currently carries a Zacks Rank #2 (Buy).
Shares of the company have lost 24.3% over the past six months compared with the industry’s 9.9% decline.
Here are some of factors that make SEI Investments a viable investment option now:
Earnings Growth: The company’s earnings have improved at a rate of 14.5% over the past three-five years, higher than the industry’s growth rate of 8.1%. Though earnings are likely to decline 8% in 2020, the same is projected to rise 15.3% in 2021.
Further, the company’s long-term (three-five years) projected EPS growth rate of 12% promises reward for investors.
Revenue Strength: Driven by persistent growth in assets, SEI Investments’ revenues witnessed a CAGR of 5.4% over the last six years (2014-2019). Further, its total AUM witnessed a CAGR of 7.5% over the last four years (2016-2019) amid a tough asset gathering backdrop in second-half 2018.
Driven by the company’s diversified product mix, strong global presence and solid assets balance, revenues are expected to improve further. Additionally, constant innovation in software will help SEI Investments win new clients and support top-line growth.
In fact, its projected sales growth rate of 0.7% for 2020 and 5.9% for 2021 ensures continuation of the revenue trend.
Solid Liquidity Position: As of Jun 30, 2020, SEI Investments had total debt worth $43.5 million, significantly lower than the cash and cash equivalents balance of $761.4 million. Further, as of July 23, 2020, the company had $288.4 million available under the credit facility. Thus, given sufficient cash balance, the company is unlikely to default on interest payment in the near term even if the economic situation worsens.
Efficient Capital Deployment Activities: SEI Investments continues to impress with enhanced capital deployments. In March 2020, it authorized an increase in the share repurchase plan by an additional $250 million. As of Jun 30, 2020, the company had $150.6 million worth of shares left to be repurchased under the existing buyback authorization. Given its robust capital position and debt/equity and dividend payout ratios lower than peers, the company is expected to sustain capital deployment activities, thereby continuing to enhance shareholder value.
Strong Leverage: SEI Investments currently has a debt/equity ratio of 0.02, lower than the industry’s 0.20. This suggests that the company will likely perform better than peers in a dynamic business environment.
Superior Return on Equity (ROE): SEI Investments’ ROE is indicative of growth potential. Its current ROE of 27.38% compares favorably with the industry’s average of 11.91%. This implies the company’s efficiency in using shareholders’ funds.
Other Stocks to Consider
Waddell & Reed (WDR - Free Report) has witnessed 2.2% upward earnings estimate revision for 2020 over the past 30 days. Over the past year, the company’s share price has inched up 0.1%. The stock sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 30 days, T. Rowe Price’s (TROW - Free Report) Zacks Consensus Estimate for earnings for the current year has been revised 5.5% upward. Its share price has increased 27.3% over the past 12 months. The stock currently carries a Zacks Rank #2.
Lazard Ltd (LAZ - Free Report) has witnessed an upward earnings estimate revision of 28.9% for 2020 over the past 30 days. Over the past year, its share price has declined 7.4%. The stock currently carries a Zacks Rank of 2.
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