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SEI (SEIC) Down 4.8% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for SEI Investments (SEIC - Free Report) . Shares have lost about 4.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is SEI due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

SEI Investments Beats on Q2 Earnings as Costs Decline

SEI Investments’ 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.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, SEI has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise SEI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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