It seems to be a wise idea to add
SEI Investments ( SEIC Quick Quote SEIC - Free Report) stock to your investment portfolio now. The company’s solid assets under management (AUM) balance, strategic buyouts and diversified product and revenue mix will likely support financials. Rising demand for the SEI Wealth Platform (SWP) and technological innovations are expected to further boost its top line. The Zacks Consensus Estimate for earnings has been unchanged for both 2022 and 2023 over the past seven days. The stock currently carries a Zacks Rank #2 (Buy). Shares of the company have lost 6% over the past year compared with the industry’s 23.5% decline. Image Source: Zacks Investment Research
Here are some of the factors that make SEI Investments a viable investment option:
Earnings Growth: The company’s earnings have improved at a rate of 9.42% over the past three-five years. Though earnings are likely to decline 10.5% for 2022, the same is projected to rise 2.1% for 2023. Further, the company’s long-term (three-five years) projected EPS growth rate of 12% promises rewards for investors. Revenue Strength: Driven by persistent growth in assets, SEI Investments’ revenues witnessed a CAGR of 6.5% over the last six years (2016-2021). Further, its total AUM recorded a CAGR of 9.7% over the last four years (ended 2021) amid a tough asset-gathering backdrop in second-half 2018. Driven by the company’s diversified product mix, strong global presence, the acquisition of Atlas Master Trust (November 2021) 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. Its projected sales growth rate of 3.7% for 2022 ensures the continuation of the revenue trend. Technological Advancements: Technology is the backbone of SEI Investments’ businesses. The company’s primary business platform — Investment Processing — delivers its outsourced software and processing services through TRUST 3000 and the SWP. The company’s strategic acquisitions, including Oranj's cloud-native technology platform, Finomial and Novus, support its technological advancement efforts. SEI Investments launched two key technology enhancements through the SWP — Digital Account Open and Digital Model Management — which is available to independent advisors. In August 2022, the company launched SEI Data Cloud through a strategic partnership with Snowflake to address the financial services industry’s demand for more advanced data integration. The SEI Data Cloud can be accessed by clients globally through the SWP or as a standalone service. These initiatives and constant innovations in software will likely help SEI Investments win new clients and thus support top-line growth. Solid Liquidity Position: As of Sep 30, 2022, the company had total debt of $33.3 million, significantly lower than the cash and cash equivalent balance of $791.4 million. Thus, given the sufficient cash balance and earnings strength, the company will likely continue to meet its debt obligations in the near term, even if the economic situation worsens. Efficient Capital Deployment Activities: SEI Investments continues to impress with enhanced capital deployments. In December 2022, the company hiked its semi-annual dividend by 7.5%. The company also has a share repurchase plan in place. In June, the company increased its buyback authorization by $200 million. As of Sep 30, 2022, $172.48 million worth of shares were left to be repurchased. Given the robust capital position along with debt/equity and dividend payout ratios lower than peers, the company is expected to sustain its capital deployment activities, thereby enhancing shareholder value. Superior Return on Equity (ROE): SEI Investments’ ROE indicates growth potential. Its current ROE of 28.74% compares favorably with the industry’s average of 11.49%. This implies the company’s efficiency in using shareholders’ funds. Other Asset Managers to Consider
A couple of other top-ranked stocks from the same industry are
Affiliated Managers Group, Inc. ( AMG Quick Quote AMG - Free Report) and Ameriprise Financial, Inc. ( AMP Quick Quote AMP - Free Report) . At present, both AMG and AMP carry a Zacks Rank #2. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here The Zacks Consensus Estimate for Affiliated Managers’ 2022 earnings has moved marginally upward over the past 30 days. In the past year, AMG’s shares have declined 5.3%. The Zacks Consensus Estimate for Ameriprise’s 2022 earnings has remained unchanged over the past month. AMP’s shares have rallied almost 1% in the past 12 months.