SEI Investments Co. (SEIC - Free Report) , with its strong global presence, and diversified products and services, remains well positioned for organic growth. Also, the company has been witnessing robust asset inflows, which is anticipated to boost profitability in the quarters ahead.
SEI Investments’ shares have gained 23.1% in the past 12 months, outperforming the industry’s growth of 16.7%.
However, the company’s escalating expenses will likely curb bottom-line growth. In addition, its high dependence on fee-based revenues remains a concern.
The company did not witness any earnings estimate revision for the current year over the past 30 days. Its Zacks Consensus Estimate remained unchanged at $2.28. As a result, the stock currently carries a Zacks Rank #3 (Hold).
Looking at the fundamentals, SEI Investments’ revenues have increased at a CAGR of 9% over the last five years (2012-2016). Given the company’s sturdy global presence, diversified revenue mix and the acquisition of Archway Technology Partners, it remains on track to further improve top line in the near term.
Furthermore, the company has been witnessing a rise in its assets under management and administration for the past several years. The same increased at a four-year (2013-2016) CAGR of 10.3%.
Further, SEI Investments has an efficient share repurchase and dividend payment policy in place. Supported by a solid capital position, it should continue enhancing shareholder value through efficient capital deployment activities.
However, elevated expenses remain a cause of concern for the company. Expenses flared up at a CAGR of 7.1% over the last five years (2012-2016). Moreover, expenses are expected to escalate further due to the company’s additional investment spending on services.
Also, its dependence on fee-based revenue has been increasing for the last few years. Significant dependence on fee income as a source of revenue might adversely affect the company’s financials in the near term, as fluctuations in markets and foreign exchange translations or regulatory changes may hamper its AUM growth.
Mentioned below are a few better-ranked stocks from the same space.
Och-Ziff Capital Management Group LLC (OZM - Free Report) witnessed an upward earnings estimate revision of 53.3% for the current year over the past 60 days. Its share price has increased 4.4% in the past six months. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ameriprise Financial, Inc.’s (AMP - Free Report) Zacks Consensus Estimate for the current year has been revised nearly 4% upward in the last 60 days. Its shares have gained merely 2% in the past six months. It carries a Zacks Rank #2 (Buy).
Cohen & Steers, Inc. (CNS - Free Report) also carries a Zacks Rank #2. The stock has witnessed an upward earnings estimate revision of 2.6% for the current year over the past 60 days. Its shares price has remained more or less stable in six months’ time.
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