SEI Investments Company SEIC shares touched a new 52-week high of $84.55 during Friday’s trading session. Quarter to date, the stock has risen 21.5%, outperforming the industry and the Zacks Finance sector. Also, SEIC stock has fared better than its peers — T. Rowe Price Group, Inc. TROW and Virtus Investment Partners, Inc. VRTS.

Quarter-to-Date Price Performance

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Does SEIC stock have more upside left despite hitting a 52-week high? Let’s try to find out.

Factors Likely to Drive SEI Investments’ Stock Higher

Impressive Stock Market Rally to Aid Revenues: On Nov. 5, the U.S. presidential elections were held, resulting in a win for Donald Trump. The expansionary stance of the President-elect fueled the equity markets rally, with the S&P 500 index crossing the 6,000 mark for the first time on Nov. 8. Further, the index hit an all-time high in Friday’s trading session, demonstrating that the momentum is still ongoing.

Given the ongoing rally, SEIC will likely witness higher inflows into investment products as investors will likely continue to participate in equity markets to generate higher returns. This will boost the company’s fee-based revenues and assets under management (AUM). Moreover, anticipated corporate tax cuts will likely enhance profitability.

Additionally, the Federal Reserve has started lowering interest rates (50 basis points or bps cut announced in September and 25 bps in November). The market is anticipating another 25-bps rate cut next week. This, along with future rate cuts, will support SEIC’s AUM, as higher profitability for the firms in general will lead to higher valuations, thus boosting equity markets further.

Also, the company’s diversified products, solid revenue mix and strong global presence will likely aid the company’s revenue growth.

SEI Investments’ total revenues witnessed a compound annual growth rate (CAGR) of 3.4% over the last five years (2018-2023), while total assets under management, advisement and administration witnessed a CAGR of 9.7%. The uptrend continued for both metrics during the first nine months of 2024.

Revenue Growth Trend

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The Zacks Consensus Estimate for sales implies growth of 10.9% and 7.1% for 2024 and 2025, respectively.

Technological Enhancements: Technology remains the backbone of SEI Investments’ businesses. The company’s primary business platform — Investment Processing — delivers its outsourced software and processing services through TRUST 3000 and the SWP. Revenues generated by these two are recorded under information processing and software servicing fees.

Though the metric recorded a decline in 2019, 2020 and 2023, it reflected a CAGR of 2.7% over the five years ending in 2023. The uptrend continued in the first nine months of 2024. The company’s strategic acquisitions, including Oranj's cloud-native technology platform, Finomial and Novus complement its technological advancement efforts. Also, the company has been undertaking several initiatives to boost technology to support advisors.

These initiatives and constant innovations in software will likely aid SEIC in capturing new clients.

Solid Balance Sheet Position: As of Sept. 30, 2024, SEIC’s total debt (comprising long-term operating lease liabilities and other long-term liabilities) was $43.5 million, significantly lower than the cash and cash equivalents of $901.1 million.

Given a solid balance sheet position, the company’s capital distribution activities remain encouraging. In December 2023, SEI Investments hiked its semi-annual dividend by 7%, following a 7.5% hike in December 2022.

The company has hiked its dividend five times in the last five years with an annualized dividend growth of 6.9%.

Dividend Yield

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Similarly, TROW and VRTS have increased their dividends five times over the past five years.

Moreover, SEIC has an existing repurchase plan in place as well. As of Sept. 30, 2024, roughly $30 million worth of authorization remained available. In October 2024, it increased its buyback authorization by $400 million.

Hence, a solid liquidity profile and robust balance sheet enable the company to address its near-term debt obligations and sustain its capital distributions.

Strategic Acquisitions: SEI Investments remains engaged in pursuing opportunistic acquisitions to aid its revenue growth and expand its footprint globally. In December 2023, the company acquired Altigo to boost its presence in the alternative space.

Further, in November 2023, SEIC acquired the National Pensions Trust, bolstering its presence in the defined contribution market, while in 2021, it acquired Atlas Master Trust. Both acquisitions deepen the company’s presence in the United Kingdom’s growing market for institutional investor services.

A strong balance sheet enables SEIC to pursue strategic buyouts in the future to expand its presence and enhance revenues.

Bullish Analyst Sentiments on SEIC Stock

Over the past month, the Zacks Consensus Estimate for 2024 earnings of $4.41 has moved marginally upward, while the same for 2025 earnings of $4.88 per share has moved 1% upward.

Estimate Revision Trend

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The projected figures imply a rise of 27.5% and 10.6% for 2024 and 2025, respectively.

Final Thoughts on SEIC Stock

Interest rate cuts, strategic buyouts, technological enhancements and a solid balance sheet are likely to support SEI Investments’ financials. Moreover, the incoming regime’s expansionary moves will further complement the company’s AUM growth to boost its top line.

Thus, SEIC stock remains an attractive bet for investors at the moment.

SEIC currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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