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SEI Investments Rises on Q1 Earnings Beat

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Shares of SEI Investments Co. (SEIC - Free Report) rose nearly 1.6% on Wednesday following its first-quarter 2014 adjusted earnings per share of 41 cents, which beat the Zacks Consensus Estimate by a penny. Moreover, the reported figure was up 24% from 33 cents earned in the year-ago quarter.

Better-than-expected results were primarily attributable to top-line growth, partially offset by higher expenses. Consistent improvement in asset position and steady capital deployment activities were the other positives.

After taking into consideration net gains from the sale of SEI Asset Korea, net income attributable to common shareholders was $74.8 million or 43 cents per share, up from $71.9 million or 41 cents per share in the prior-year quarter.

Behind the Headlines

Revenues at SEI Investments grew 11% year over year to $302.4 million in the reported quarter. The improvement was mainly owing to a rise in asset management, administration and distribution fees. However, the figure lagged the Zacks Consensus Estimate of $305.0 million.

Total expenses were $224.0 million, up 6% from the prior-year quarter. The increase resulted from a rise in most of the components of expense. However, this was partially offset by a decline in brokerage commissions, stock-based compensation, facilities, supplies and other costs as well as depreciation costs.

Operating income increased 31% from the year-ago quarter to $78.4 million.

As of Mar 31, 2014, assets under management (AUM) rose 17% year over year to $239.3 billion. Total client AUM was recorded at $342.4 billion, up 19% from $288.6 billion as of Mar 31, 2013.

Share Repurchases

In the said quarter, SEI Investments bought back 2.0 million shares of its common stock for $69.0 million.

Additionally, the company approved an increase in its stock repurchase program. Management authorized an additional $200 million to the buyback plan. Hence, as of Mar 31, 2014, the available authorization under the program was roughly $212 million.

Our Viewpoint

We believe that SEI Investment will continue to benefit from the growing demand for risk management and alternative investment solutions in the financial service industry. Moreover, the company’s capital deployment activities in the form of share buybacks and dividend hikes make it an attractive pick for investors. The company’s strong asset inflows will also likely boost its overall growth going forward.

Nevertheless, the persistent low interest rate environment, mounting expenses and stringent regulations pose challenges.

Currently, SEI Investments has a Zacks Rank #4 (Sell).

Among other investment mangers, Ameriprise Financial, Inc. (AMP - Free Report) and Invesco Ltd. (IVZ - Free Report) are scheduled to announce results on Apr 28 and May 1 respectively, while Franklin Resources Inc. (BEN - Free Report) will release second-quarter fiscal 2014 results on Apr 28.

Read the Full Research Report on IVZ
Read the Full Research Report on AMP
Read the Full Research Report on BEN
Read the Full Research Report on SEIC

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