Watch Out: Barbarians At The Gate For SEI Investments (SEIC)

Trade-Ideas LLC identified SEI Investments ( SEIC) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified SEI Investments as such a stock due to the following factors:

  • SEIC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.8 million.
  • SEIC has traded 500,748 shares today.
  • SEIC traded in a range 310% of the normal price range with a price range of $2.60.
  • SEIC traded above its daily resistance level (quality: 148 days, meaning that the stock is crossing a resistance level set by the last 148 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on SEIC:

SEI Investments Co. is a publicly owned investment manager. The firm provides wealth management and investment advisory services to its clients through its subsidiaries. The stock currently has a dividend yield of 1%. SEIC has a PE ratio of 26. Currently there are 4 analysts that rate SEI Investments a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for SEI Investments has been 777,000 shares per day over the past 30 days. SEI Investments has a market cap of $8.3 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.40 and a short float of 2.4% with 4.64 days to cover. Shares are down 2.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SEI Investments as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 24.5%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • SEI INVESTMENTS CO's earnings per share declined by 6.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SEI INVESTMENTS CO increased its bottom line by earning $1.96 versus $1.85 in the prior year. This year, the market expects an improvement in earnings ($2.05 versus $1.96).
  • Net operating cash flow has remained constant at $78.02 million with no significant change when compared to the same quarter last year. Even though SEI INVESTMENTS CO's cash flow growth was minimal, the firm managed to surpass its industry's average growth rate of -198.91%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Capital Markets industry average. The net income has decreased by 8.4% when compared to the same quarter one year ago, dropping from $84.61 million to $77.50 million.

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