SEI Investments Company (SEIC - Free Report) recently announced that its board of directors has given consent to an additional share buyback program of up to $250 million with immediate effect, to enhance shareholder value. This, thus, increased the repurchase authorization to around $268 million. So far in 2018, the company has repurchased shares worth $352.4 million.
Further, SEI Investments has announced its semi-annual dividend of 33 cents, reflecting a 10% hike from the previous payout. It will be paid on Jan 8, 2019 to the shareholders on record as of Dec 27, 2018.
Considering last day’s closing price of $48.47 per share, the dividend yield is currently 1.36% Notably, the company has been increasing dividend annually since 2009. Previously, in December 2017, the company hiked its dividend by 7.1%.
Given the solid liquidity position, along with lower debt/equity and dividend payout ratios than its peers, SEI Investments is expected to sustain its capital-deployment activities, thereby continuing to enhance shareholder value.
Despite the impressive capital deployment activities and continued growth in revenues, this Zacks Rank #3 (Hold) stock has lost 32.5% year to date compared with 25.9% decline recorded by the industry.
Wondering why the stock is losing its steam? Let’s have a look at some of the factors that might have led to the decline.
Looking at the cost front, SEI Investments’ continuously rising expenses remain a major cause of concern. Expenses witnessed a CAGR of 7.7% over the last six years (2012–2017) mainly due to an increase in compensation costs. Further, management expects expenses to remain elevated over the next couple of years due to additional investment spending on services.
Also, SEI Investments high dependence on asset management, administration and distribution fees as a source of revenue could adversely affect the company’s financials in the near term. This is because fluctuations in markets and foreign exchange translations or regulatory changes may hamper growth of assets under management.
Apart from the above concerns, ongoing trade war tension and other issues might perhaps have been the reason for the dismal price performance of SEI Investments.
However, the company has been witnessing consistent improvement in revenues over the past few years. Further, its diversified product and revenue mix as well as strong global presence and the acquisition of Archway Technology Partners, reflect promising near-term prospects.
Stocks to Consider
A few better-ranked stocks in the same space are Woori Bank (WF - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), KKR & Co. L.P. (KKR - Free Report) and TD Ameritrade Holding Corporation (AMTD - Free Report) , carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Woori’s Zacks Consensus Estimate for 2018 earnings has moved up 18.4% over the past 60 days. In two years’ time, the company’s shares have gained 25.2%.
KKR & Co.’s Zacks Consensus Estimate for fiscal 2018 earnings has moved 10.5% north in the past 60 days. Also, share price of the company has increased 24.1% in past two years.
TD Ameritrade Zacks Consensus Estimate for current-year earnings has been revised 2.6% upward over the past 60 days. Also, the company’s shares have risen nearly 15% in the past two years.
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