SEI Earnings: Revenue and Margins Moving in the Right Direction

Narrow-moat-rated SEI Investments reported a broad-based strong quarter, in our view, which is in contrast to the mixed results we’ve seen over the last several quarters. Higher markets are boosting asset-based fees, sales activity saw improvements across multiple segments, a decision to increase cash deposit allocations in the investment advisors segment will boost revenue, and performance fees at LSV were strong. Revenue grew 13%, and expenses, which grew 7%, were well-controlled, resulting in a 33% increase in operating income. As we incorporate these results and strong market appreciation since our last update, we expect to increase our $76 per share fair value estimate by a range of 5%-15%.