SEI Investments (SEIC) Beats On Q1 Earnings As Revenues Rise

SEI Investments Co. (NASDAQ:SEIC) reported first-quarter 2017 earnings of 55 cents per share, surpassing the Zacks Consensus Estimate of 52 cents. Also, the bottom line improved 20% from the prior-year quarter.

Better-than-expected results were driven by a rise in revenues, partly offset by higher operating expenses. Further, improvement in assets under management (AUM) aided the results.

Net income for the quarter came in at $88.7 million, up 15% from the year-ago period.

Revenues and AUM Rise, Expenses Jump

Total revenue grew 8% year over year to $360 million. The rise mainly reflected an increase in asset management, administration and distribution fees as well as higher information processing and software servicing fees. Further, the figure lagged the Zacks Consensus Estimate of $363.8 million.

Total expenses amounted to $251.9 million, up 7% year over year. Components other than software royalties & other information processing costs, and brokerage commissions recorded an upside.

Operating income rose 8% year over year to $93.5 million.

As of Mar 31, 2017, AUM rose 12% year over year to $297.1 billion. Total client AUM was $478.1 billion, up 14% year over year. Note that client AUM does not include $10.1 billion related to Funds of Funds assets that were reported on Mar 31, 2017.

Share Repurchase

In the reported quarter, SEI Investments bought back 1.1 million shares of its common stock for $55.4 million.

Our Take

SEI Investments’ innovative and diverse global investment products and services position it well to grow organically. Also, robust asset inflows are likely to be accretive to the company’s overall growth. Further, impressive capital deployment activities should enhance shareholder value.

However, elevated expenses, increased reliance on fee-based revenues and regulatory constraints remain primary concerns for the company.

Currently, SEI Investments carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other Investment managers, Ameriprise Financial, Inc. (NYSE:AMP) , Invesco Ltd. (NYSE:IVZ) and Waddell & Reed Financial Inc. (NYSE:WDR) are slated to release their numbers on Apr 24, Apr 27 and May 2, respectively.

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