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Why Is SEI (SEIC) Down 11.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for SEI Investments (SEIC - Free Report) . Shares have lost about 11.8% 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 drivers.
SEI Investments Lags on Q4 Earnings as Expenses Rise
SEI Investments’ fourth-quarter 2019 earnings of 84 cents per share lagged the Zacks Consensus Estimate of 86 cents. However, the figure reflects a rise of 15.1% from the prior-year quarter.
Results were hurt by a rise in expenses. However, growth in revenues and AUM were tailwinds.
Net income was $128.7 million, up 10.9% from the year-ago quarter.
For 2019, earnings per share were $3.24, which lagged the Zacks Consensus Estimate of $3.26. However, the figure reflects growth of 3.2% from the previous year. Net income for the year was $501.4 million, down marginally from that reported in 2018.
Revenues & AUM Improve, Expenses Rise
Total quarterly revenues were $423.2 million, up 4.5% year over year. The rise reflected higher asset management, administration and distribution fees. Moreover, the reported figure surpassed the Zacks Consensus Estimate of $422.5 million.
For 2019, total revenues were $1.65 billion, up 1.6% year over year. The rise reflected higher asset management, administration and distribution fees. The reported figure was in line with the Zacks Consensus Estimate.
Total quarterly expenses were $307.1 million, up 1.7% year over year. The rise was due to an increase in almost all components of expenses, except for software royalties and other information processing costs; compensation, benefits and other personnel expenses; and depreciation costs.
Operating income increased 12.8% year over year to $116.1 million.
As of Dec 31, 2019, AUM was $352 billion, reflecting a rise of 14.6% from the prior-year quarter. Client assets under administration (AUA) were $683.3 billion, up 19.4% year over year. Note that client AUA does not include $13.1 billion related to Funds of Funds assets that were reported on Dec 31, 2019.
Share Repurchase
In the reported quarter, SEI Investments bought back 1.3 million shares for $81.2 million.
Outlook
In 2020, management expects capital expenditures within capitalized software to be $45 million and nearly $25 million of it will likely be related to the facility expansion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, SEI has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. 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 C. 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 has been net zero. Notably, SEI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is SEI (SEIC) Down 11.8% Since Last Earnings Report?
A month has gone by since the last earnings report for SEI Investments (SEIC - Free Report) . Shares have lost about 11.8% 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 drivers.
SEI Investments Lags on Q4 Earnings as Expenses Rise
SEI Investments’ fourth-quarter 2019 earnings of 84 cents per share lagged the Zacks Consensus Estimate of 86 cents. However, the figure reflects a rise of 15.1% from the prior-year quarter.
Results were hurt by a rise in expenses. However, growth in revenues and AUM were tailwinds.
Net income was $128.7 million, up 10.9% from the year-ago quarter.
For 2019, earnings per share were $3.24, which lagged the Zacks Consensus Estimate of $3.26. However, the figure reflects growth of 3.2% from the previous year. Net income for the year was $501.4 million, down marginally from that reported in 2018.
Revenues & AUM Improve, Expenses Rise
Total quarterly revenues were $423.2 million, up 4.5% year over year. The rise reflected higher asset management, administration and distribution fees. Moreover, the reported figure surpassed the Zacks Consensus Estimate of $422.5 million.
For 2019, total revenues were $1.65 billion, up 1.6% year over year. The rise reflected higher asset management, administration and distribution fees. The reported figure was in line with the Zacks Consensus Estimate.
Total quarterly expenses were $307.1 million, up 1.7% year over year. The rise was due to an increase in almost all components of expenses, except for software royalties and other information processing costs; compensation, benefits and other personnel expenses; and depreciation costs.
Operating income increased 12.8% year over year to $116.1 million.
As of Dec 31, 2019, AUM was $352 billion, reflecting a rise of 14.6% from the prior-year quarter. Client assets under administration (AUA) were $683.3 billion, up 19.4% year over year. Note that client AUA does not include $13.1 billion related to Funds of Funds assets that were reported on Dec 31, 2019.
Share Repurchase
In the reported quarter, SEI Investments bought back 1.3 million shares for $81.2 million.
Outlook
In 2020, management expects capital expenditures within capitalized software to be $45 million and nearly $25 million of it will likely be related to the facility expansion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, SEI has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. 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 C. 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 has been net zero. Notably, SEI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.