SEI Investments (SEIC) Q4 Earnings & Revenues Improve Y/Y

SEI Investments Co.’s (NASDAQ:SEIC) fourth-quarter 2017 earnings of 75 cents per share compared favorably with the prior-year quarter figure of 55 cents. Results for the quarter included net benefit of $12.4 million related to the Tax Act.

An increase in total revenues, partly offset by higher operating expenses aided the year-over-year improvement in earnings. Moreover, growth in assets under management (AUM) remained strong during the quarter.

Net income for the quarter came in at $122.1 million, increasing 37.8% from the year-ago period.

For 2017, the company reported net income of $404.4 million or $2.49 per share, up from $333.8 million or $2.03 per share in 2016.

Revenues and AUM Improve, Expenses Rise

Total revenues for the quarter came in at $408.2 million, increasing 10.7% year over year. The rise reflected an increase in asset management, administration and distribution fees, and information processing and software servicing fees.

Total revenues for 2017 were $1.53 billion, increasing 8.9% from the prior year.

Total expenses during the quarter were $301.3 million, increasing 11.3% year over year. The rise was primarily due to higher compensation, benefits and other personnel costs, stock-based compensation, consulting, outsourcing and professional fees, and data processing and computer related fees.

Operating income increased 9% year over year to $107 million.

As of Dec 31, 2017, AUM was $337.32 billion, reflecting an increase of 19.1% from the prior-year quarter. Total client AUM was $518.43 billion, increasing 10.8% year over year. Note that client AUM does not include $11.2 billion related to Funds of Funds assets that were reported on Dec 31, 2017.

Share Repurchase

In the reported quarter, SEI Investments bought back 865,000 shares for $59.8 million.

Our Take

SEI Investments’ innovative and diverse global investment products and services position it well to grow organically. Also, robust asset growth will continue to support profitability. Further, impressive capital deployment activities are likely to enhance shareholder value.

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

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

Performance of Other Investment Managers

Ameriprise Financial Inc.’s (NYSE:AMP) fourth-quarter 2017 adjusted operating earnings per share of $3.26 comfortably surpassed the Zacks Consensus Estimate of $3.09. Results benefited from an improvement in revenues. Also, growth in AUM and assets under administration (AUA) were on the positive side. However, a rise in expenses acted as a headwind.

BlackRock, Inc. (NYSE:BLK) reported fourth-quarter 2017 adjusted earnings of $6.24 per share, which outpaced the Zacks Consensus Estimate of $6.08. Results benefited from an improvement in revenues, rise in AUM and steady long-term inflows. However, increase in operating expenses acted as a headwind.

Waddell & Reed Financial Inc.’s (NYSE:WDR) fourth-quarter 2017 adjusted earnings of 48 cents per share outpaced the Zacks Consensus Estimate of 45 cents. Results benefited from a modest improvement in revenues and AUM. Also, decline in operating expenses was a tailwind.

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