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SEI Investments (SEIC) Beats on Q2 Earnings as Costs Decline
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SEI Investments Co.’s (SEIC - Free Report) second-quarter 2019 earnings of 82 cents per share surpassed the Zacks Consensus Estimate of 79 cents. The figure reflected rise of 9.3% from the prior-year quarter.
Results were primarily driven by growth in assets under management (AUM) and higher revenues. Moreover, a decline in expenses was another tailwind, which supported results.
Net income was $126.5 million, up from $121.7 million recorded in the year-ago period.
Revenues & AUM Increase, Expenses Fall
Total revenues were $409.6 million, up 1.2% year over year. This rise reflected higher asset management, administration and distribution fees. However, the reported figure missed the Zacks Consensus Estimate of $412.5 million.
Total expenses were $289.5 million, down 1.7% year over year. This decline was due to a fall in almost all components of expenses except for subadvisory, distribution and other asset management costs; data processing and computer-related expenses; depreciation costs; and amortization expenses.
Operating income increased 8.9% year over year to $120.1 million.
As of Jun 30, 2019, AUM was $335.3 billion, reflecting growth of nearly 1.2% from the prior-year quarter. Client assets under administration (AUA) were $630.5 billion, increasing 15.7% year over year. Note that client AUA does not include $11.6 billion related to Funds of Funds assets that were reported on Jun 30, 2019.
Share Repurchase
In the reported quarter, SEI Investments bought back 1.8 million shares for $97 million.
On Jul 23, 2019, the company announced an increase in its share repurchase program by an additional $250 million, which increases the available authorization under the program to $280 million.
Our Take
SEI Investments is well positioned for organic growth, given its innovative and diverse global investment products and services. Moreover, growth in AUM and rising demand for SEI Wealth Platform (“SWP”) will likely boost its revenue prospects. However, despite a fall in expenses in the second quarter, overall costs are likely to remain elevated in the near term due to higher compensation costs. This will likely hurt bottom-line growth to some extent.
SEI Investments Company Price, Consensus and EPS Surprise
BlackRock, Inc.’s (BLK - Free Report) second-quarter 2019 adjusted earnings of $6.41 per share lagged the Zacks Consensus Estimate of $6.52. Moreover, the figure was 3.8% lower than the year-ago quarter’s number.
Blackstone (BX - Free Report) reported second-quarter 2019 distributable earnings of 57 cents, beating the Zacks Consensus Estimate of 50 cents. Moreover, the figure reflects improvement from 56 cents earned in the prior-year quarter.
Cohen & Steers’ (CNS - Free Report) second-quarter 2019 adjusted earnings of 62 cents per share lagged the Zacks Consensus Estimate of 63 cents. However, the bottom line was 5.1% higher than the year-ago quarter figure.
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SEI Investments (SEIC) Beats on Q2 Earnings as Costs Decline
SEI Investments Co.’s (SEIC - Free Report) second-quarter 2019 earnings of 82 cents per share surpassed the Zacks Consensus Estimate of 79 cents. The figure reflected rise of 9.3% from the prior-year quarter.
Results were primarily driven by growth in assets under management (AUM) and higher revenues. Moreover, a decline in expenses was another tailwind, which supported results.
Net income was $126.5 million, up from $121.7 million recorded in the year-ago period.
Revenues & AUM Increase, Expenses Fall
Total revenues were $409.6 million, up 1.2% year over year. This rise reflected higher asset management, administration and distribution fees. However, the reported figure missed the Zacks Consensus Estimate of $412.5 million.
Total expenses were $289.5 million, down 1.7% year over year. This decline was due to a fall in almost all components of expenses except for subadvisory, distribution and other asset management costs; data processing and computer-related expenses; depreciation costs; and amortization expenses.
Operating income increased 8.9% year over year to $120.1 million.
As of Jun 30, 2019, AUM was $335.3 billion, reflecting growth of nearly 1.2% from the prior-year quarter. Client assets under administration (AUA) were $630.5 billion, increasing 15.7% year over year. Note that client AUA does not include $11.6 billion related to Funds of Funds assets that were reported on Jun 30, 2019.
Share Repurchase
In the reported quarter, SEI Investments bought back 1.8 million shares for $97 million.
On Jul 23, 2019, the company announced an increase in its share repurchase program by an additional $250 million, which increases the available authorization under the program to $280 million.
Our Take
SEI Investments is well positioned for organic growth, given its innovative and diverse global investment products and services. Moreover, growth in AUM and rising demand for SEI Wealth Platform (“SWP”) will likely boost its revenue prospects. However, despite a fall in expenses in the second quarter, overall costs are likely to remain elevated in the near term due to higher compensation costs. This will likely hurt bottom-line growth to some extent.
SEI Investments Company Price, Consensus and EPS Surprise
SEI Investments Company price-consensus-eps-surprise-chart | SEI Investments Company Quote
Currently, SEI Investments carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
BlackRock, Inc.’s (BLK - Free Report) second-quarter 2019 adjusted earnings of $6.41 per share lagged the Zacks Consensus Estimate of $6.52. Moreover, the figure was 3.8% lower than the year-ago quarter’s number.
Blackstone (BX - Free Report) reported second-quarter 2019 distributable earnings of 57 cents, beating the Zacks Consensus Estimate of 50 cents. Moreover, the figure reflects improvement from 56 cents earned in the prior-year quarter.
Cohen & Steers’ (CNS - Free Report) second-quarter 2019 adjusted earnings of 62 cents per share lagged the Zacks Consensus Estimate of 63 cents. However, the bottom line was 5.1% higher than the year-ago quarter figure.
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
Click here to see these breakthrough stocks now >>