It has been about a month since the last earnings report for SEI Investments (SEIC). Shares have added about 6.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is SEI due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
SEI Investments' Q2 Earnings Miss, Costs & AUM Rise Y/Y
SEI Investments’ second-quarter 2022 earnings of 81 cents per share lagged the Zacks Consensus Estimate by a penny. The bottom line reflects a decline of 12.9% from the prior-year quarter.
Results were hurt by a rise in expenses. However, growth in revenues and an increase in assets under management balance were tailwinds.
Net income was $111.3 million, down 16.8% from the year-ago quarter.
Revenues, Expenses & AUM Rise
Total revenues were $481.7 million, up 1.3% year over year. The upswing reflects an increase in both asset management, administration and distribution fees, and information processing and software servicing fees. The top line beat the Zacks Consensus Estimate of $471.7 million.
Total expenses were $365.8 million, up 7.7% year over year. The rise was due to an increase in all cost components, except for sub-advisory, distribution and other asset management costs, software royalties and other information processing costs, stock-based compensation expenses and depreciation charges.
Operating income declined 14.8% year over year to $115.9 million.
As of Jun 30, 2022, AUM was $403.6 billion, reflecting a rise of 1.1% from the prior-year quarter. Client assets under administration (AUA) were $889 billion, up 1% year over year. Client AUA did not include $12.9 billion related to Funds of Funds assets reported on Jun 30, 2022.
Share Repurchase Update
In the reported quarter, SEI Investments bought back 2 million shares for $109.3 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted -7.14% due to these changes.
At this time, SEI has a nice Growth Score of B, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, SEI has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
SEI belongs to the Zacks Financial - Investment Management industry. Another stock from the same industry, BlackRock (BLK), has gained 16.6% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.
BlackRock reported revenues of $4.53 billion in the last reported quarter, representing a year-over-year change of -6.1%. EPS of $7.36 for the same period compares with $10.03 a year ago.
BlackRock is expected to post earnings of $8.41 per share for the current quarter, representing a year-over-year change of -23.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -2.1%.
BlackRock has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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