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Will SEI Investments Rebound on Capital Deployment Plan?
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SEI Investments Company (SEIC - Free Report) has announced impressive capital deployment plans. Earlier in the week, this investment management firm announced a 7% hike in its semi-annual dividend. The dividend of 28 cents will be paid on Jan 6, 2017 to the shareholders on record as of Dec 27.
Considering last day’s closing price of $71.94 per share, the dividend yield currently stands at 1.14%. Notably, the company has been increasing dividend annually since 2009.
Concurrently, SEI Investments also increased its share repurchase authorization. The company’s board of directors has approved additional $200 million worth of buy back, thus increasing the total authorization to nearly $242 million.
As of Sep 30, 2016, SEI Investments repurchased 5.2 million shares for $227.6 million. Further, for the nine months ended Sep 30, 2016, the company paid cash dividends worth $87.4 million.
Despite the impressive capital deployment activities and continued growth in revenues, SEI Investments stock declined 6.3% year to date, as against a gain of 6.9% for the Zacks categorized Investment Management industry.
So, why the shares continue to underperform?
Looking at the cost front, SEI Investments is in the midst of a significant overhaul. Management expects R&D expenses to be nearly 12% of revenues by the end of 2016 and through 2017, driven by growth in its large new clients in multiple markets. Beyond 2017, R&D costs will go down to normalized levels of 8–10% of revenues.
Hence, the increase in R&D expenses along with expected increase in other costs is expected to lead to a 4–6% rise in the company’s total costs in fourth-quarter 2016 from the second-quarter level.
So, cost concerns along with other macro issues are perhaps the reason for the dismal price performance of SEI Investments.
Nonetheless, the impressive capital deployment plans announced by management is likely to help regain investors’ confidence in the stock. Further, SEI Investments’ earnings are projected to grow 1.7% for 2016 and 14.3% for 2017.
Some other investment managers and brokers that have raised their dividends in the recent past include Eaton Vance Corp. (EV - Free Report) , Franklin Resources Inc. (BEN - Free Report) and Raymond James Financial, Inc. (RJF - Free Report) . Eaton Vance hiked its quarterly dividend 6%, while Franklin increased its dividend by 11% and Raymond James has announced 10% rise.
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Will SEI Investments Rebound on Capital Deployment Plan?
SEI Investments Company (SEIC - Free Report) has announced impressive capital deployment plans. Earlier in the week, this investment management firm announced a 7% hike in its semi-annual dividend. The dividend of 28 cents will be paid on Jan 6, 2017 to the shareholders on record as of Dec 27.
Considering last day’s closing price of $71.94 per share, the dividend yield currently stands at 1.14%. Notably, the company has been increasing dividend annually since 2009.
Concurrently, SEI Investments also increased its share repurchase authorization. The company’s board of directors has approved additional $200 million worth of buy back, thus increasing the total authorization to nearly $242 million.
As of Sep 30, 2016, SEI Investments repurchased 5.2 million shares for $227.6 million. Further, for the nine months ended Sep 30, 2016, the company paid cash dividends worth $87.4 million.
Despite the impressive capital deployment activities and continued growth in revenues, SEI Investments stock declined 6.3% year to date, as against a gain of 6.9% for the Zacks categorized Investment Management industry.
So, why the shares continue to underperform?
Looking at the cost front, SEI Investments is in the midst of a significant overhaul. Management expects R&D expenses to be nearly 12% of revenues by the end of 2016 and through 2017, driven by growth in its large new clients in multiple markets. Beyond 2017, R&D costs will go down to normalized levels of 8–10% of revenues.
Hence, the increase in R&D expenses along with expected increase in other costs is expected to lead to a 4–6% rise in the company’s total costs in fourth-quarter 2016 from the second-quarter level.
So, cost concerns along with other macro issues are perhaps the reason for the dismal price performance of SEI Investments.
Nonetheless, the impressive capital deployment plans announced by management is likely to help regain investors’ confidence in the stock. Further, SEI Investments’ earnings are projected to grow 1.7% for 2016 and 14.3% for 2017.
Currently, SEI Investments carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other investment managers and brokers that have raised their dividends in the recent past include Eaton Vance Corp. (EV - Free Report) , Franklin Resources Inc. (BEN - Free Report) and Raymond James Financial, Inc. (RJF - Free Report) . Eaton Vance hiked its quarterly dividend 6%, while Franklin increased its dividend by 11% and Raymond James has announced 10% rise.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>