SEI Investments (SEIC) Q3 Earnings Beat On Higher Assets

SEI Investments Co. (NASDAQ:SEIC) reported a positive earnings surprise of 8.2% in third-quarter 2016. Earnings per share of 53 cents outpaced the Zacks Consensus Estimate by 4 cents. Moreover, the bottom line improved 13% from the prior-year quarter tally of 47 cents. The third-quarter 2015 figure included certain non-recurring charges.

Higher revenues and income from operations, coupled with improvement in asset position, aided the better-than-expected results. On the down side, the quarter witnessed an increase in expenses.

Net income was $86.7 million, up 9% from the year-ago quarter.

Revenues and AUM Grow, Expenses Up

Revenues at SEI Investments grew 6% year over year to $354.6 million. The rise mainly reflected an increase in asset management, administration and distribution fees as well as elevated cash flows. Moreover, the figure surpassed the Zacks Consensus Estimate of $352 million.

Total expenses amounted to $257.4 million, up 3.5% year over year. Components other than software royalties & other information processing costs, brokerage commissions and facilities, supplies and other costs recorded an upside.

Operating income rose 11.7 % year over year to $97.2 million.

As of Sep 30, 2016, assets under management (AUM) rose 14.9% year over year to $280.9 billion. Total client AUM was $470.5 billion, up 19.7%. Note that client AUM as of Sep 30, 2016 does not include $1.3 billion related to Funds of Funds assets that were reported on Dec 31, 2015.

Share Repurchase

In the reported quarter, SEI Investments bought back 1.6 million shares of its common stock for $73.4 million.

Our Take

SEI Investments, backed by its global investment products and services, is expected to continue generate incremental revenues in the coming quarters. Moreover, robust asset inflows are likely to be accretive to the company’s overall growth.

However, its high dependence on fee-based revenues and rise in expenses due to additional investment spending on services, along with a stringent regulatory landscape, can adversely impact the company’s financials in the near to medium term.

SEI INVESTMENTS Price, Consensus and EPS Surprise

Currently, SEI Investments has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Among other Investment managers, Waddell & Reed Financial Inc. (NYSE:WDR) and Ameriprise Financial, Inc. (NYSE:AMP) are both slated to release third-quarter 2016 results on Oct 25, while The Blackstone Group L.P. (NYSE:BX) is expected to release quarterly numbers on Oct 27.

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