SEI Investments (SEIC)

Financial technology provider SEI Investments (NASDAQ:SEIC) fell short of the market’s revenue expectations in Q3 CY2025, but sales rose 7.7% year on year to $578.5 million. Its GAAP profit of $1.30 per share was 4.2% above analysts’ consensus estimates.

Company Overview

Founded in 1968 as Simulated Environments Inc. to train bank loan officers using computer simulations, SEI Investments (NASDAQ:SEIC) provides technology platforms, investment management, and operational solutions for financial institutions, wealth managers, and investors.

Custody banks safeguard financial assets and provide services like settlement, accounting, and regulatory compliance for institutional investors. Growth opportunities stem from increasing global assets under custody, demand for data analytics, and blockchain technology adoption for settlement efficiency. Challenges include fee pressure from large clients, substantial technology investment requirements, and competition from both traditional players and fintech firms entering the space.

SEI Investments competes with financial technology and investment management firms including Broadridge Financial Solutions (NYSE:BR), SS&C Technologies (NASDAQ:SSNC), BlackRock (NYSE:BLK), and Fidelity National Information Services (NYSE:FIS).

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, SEI Investments grew its revenue at a mediocre 6.2% compounded annual growth rate. This wasn’t a great result compared to the rest of the financials sector, but there are still things to like about SEI Investments.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. SEI Investments’s annualized revenue growth of 9% over the last two years is above its five-year trend, suggesting some bright spots. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, SEI Investments’s revenue grew by 7.7% year on year to $578.5 million, missing Wall Street’s estimates.

Assets Under Management (AUM) encompasses all client funds under a firm's investment management umbrella. The recurring fee structure on these assets provides consistent revenue generation, offering financial stability even during periods of poor investment returns, though sustained underperformance can impact future asset flows.

SEI Investments’s AUM has grown at an annual rate of 5.1% over the last five years, worse than the broader financials industry and slower than its total revenue. When analyzing SEI Investments’s AUM over the last two years, we can see that growth accelerated to 8.9% annually. This performance aligned with its total revenue.

SEI Investments’s AUM punched in at $213.8 billion this quarter. This print was 8.4% higher than the same quarter last year.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Custody Bank companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Interest income and expenses play a big role in financial institutions' profitability, so they should be factored into the definition of profit. Taxes, however, should not as they are largely out of a company's control. This is pre-tax profit by definition.

Over the last four years, SEI Investments’s pre-tax profit margin has fallen by 3.5 percentage points, going from 36.1% to 39.6%. It has also expanded by 8.9 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

In Q3, SEI Investments’s pre-tax profit margin was 36.4%. This result was 1.2 percentage points worse than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

SEI Investments’s EPS grew at a decent 12.8% compounded annual growth rate over the last five years, higher than its 6.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For SEI Investments, its two-year annual EPS growth of 27% was higher than its five-year trend. This acceleration made it one of the faster-growing financials companies in recent history.

In Q3, SEI Investments reported EPS of $1.30, up from $1.19 in the same quarter last year. This print beat analysts’ estimates by 4.2%. Over the next 12 months, Wall Street expects SEI Investments’s full-year EPS of $5.44 to stay about the same.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, SEI Investments has averaged an ROE of 26.7%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows SEI Investments has a strong competitive moat.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

SEI Investments currently has $26.32 million of debt and $2.4 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 3.5× for a financials business.

It was good to see SEI Investments beat analysts’ EPS expectations this quarter. On the other hand, its revenue fell slightly short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock remained flat at $81.20 immediately after reporting.

Updated: December 3, 2025 at 11:14 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in SEI Investments.

There are multiple reasons why we think SEI Investments is an amazing business. Although its revenue growth was mediocre over the last five years, its growth over the next 12 months is expected to be higher. And while its AUM growth was uninspiring over the last five years, its stellar ROE suggests it has been a well-run company historically. In addition, SEI Investments’s expanding pre-tax profit margin shows the business has become more efficient.

SEI Investments’s P/E ratio based on the next 12 months is 14.8x. Looking across the spectrum of financials companies today, SEI Investments’s fundamentals shine bright. We like the stock at this price.

Wall Street analysts have a consensus one-year price target of $95.17 on the company (compared to the current share price of $81.01), implying they see 17.5% upside in buying SEI Investments in the short term.