Firstly, continuously mounting operating expenses remain a major cause of concern for SEI Investments. Though total capital expenditure is expected to marginally decline in 2016, management expects expenses to remain elevated over the next couple of years due to additional investment spending on services.
Secondly, the stock looks significantly overvalued on the basis of its Price-to-Earnings (P/E) and PEG ratios. SEI Investments has a P/E ratio of 22.18 compared with the industry average of 12.17. Also, the company's PEG ratio of 1.64 is above the industry average of 1.51.
Thirdly, the estimates for this Zacks Rank #3 (Hold) stock has remained stable. Over the last 30 days, the Zacks Consensus Estimate was $1.98 for 2016 and $2.27 for 2017.
However, SEI Investments has been witnessing persistent growth in revenues over the past few years. The company's diversified product portfolio and revenue mix as well as its strong global presence reflect organic growth prospects. In addition, the company is expected to deliver sales growth of 4.5% for 2016 and 9.5% for 2017.
Further, SEI Investments' earnings have grown 41.2% annually over the last three to five years. Earnings growth is anticipated to continue in the near term as well. The company's projected EPS (earnings per share) growth (F1/F0) is 1.67% for 2016 and (F2/F1) 14.3% for 2017.
Additionally, SEI Investments continues to impress with its enhanced capital deployment activities. In Dec 2016, the company increased its share buyback authorization by additional $200 million and announced a 7% hike in its semi-annual dividend. Driven by a strong balance sheet position, the company is expected to continue deploying capital meaningfully.
Stocks to Consider
Some better-ranked stocks in the finance space include The Goldman Sachs Group, Inc. GS , The Charles Schwab Corporation SCHW and Carolina Financial Corporation CARO , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Goldman has witnessed an upward earnings estimate revision of 2.1% for 2016, over the past 30 days. Its share price has risen 68.3%, over the last six months.
For Schwab, over the past 30 days, its Zacks Consensus Estimate has been revised 1.6% upward for 2016. Its share price has increased 69.4% over the last six months.
Carolina Financial has witnessed an upward earnings estimate revision of 1.3% for 2016, over the past 30 days. Over the last six months, its share price is up 67.3%.
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