Reviewing SEI Investments (SEIC) and Charles Schwab (SCHW)

SEI Investments (NASDAQ:SEIC) and Charles Schwab (NYSE:SCHW) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Analyst Ratings

This is a summary of current ratings and recommmendations for SEI Investments and Charles Schwab, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SEI Investments 0 1 3 0 2.75
Charles Schwab 2 5 6 0 2.31

SEI Investments presently has a consensus target price of $82.00, suggesting a potential upside of 49.25%. Charles Schwab has a consensus target price of $59.08, suggesting a potential upside of 20.55%. Given SEI Investments’ stronger consensus rating and higher probable upside, equities research analysts plainly believe SEI Investments is more favorable than Charles Schwab.

Profitability

This table compares SEI Investments and Charles Schwab’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SEI Investments 30.25% 29.98% 24.81%
Charles Schwab 30.83% 17.96% 1.18%

Valuation & Earnings

This table compares SEI Investments and Charles Schwab’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SEI Investments $1.53 billion 5.64 $404.38 million $2.32 23.68
Charles Schwab $8.62 billion 7.68 $2.35 billion $1.64 29.88

Charles Schwab has higher revenue and earnings than SEI Investments. SEI Investments is trading at a lower price-to-earnings ratio than Charles Schwab, indicating that it is currently the more affordable of the two stocks.

Dividends

SEI Investments pays an annual dividend of $0.60 per share and has a dividend yield of 1.1%. Charles Schwab pays an annual dividend of $0.52 per share and has a dividend yield of 1.1%. SEI Investments pays out 25.9% of its earnings in the form of a dividend. Charles Schwab pays out 31.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. SEI Investments has increased its dividend for 8 consecutive years and Charles Schwab has increased its dividend for 2 consecutive years. SEI Investments is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

SEI Investments has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, Charles Schwab has a beta of 1.55, suggesting that its stock price is 55% more volatile than the S&P 500.

Insider and Institutional Ownership

68.9% of SEI Investments shares are held by institutional investors. Comparatively, 80.3% of Charles Schwab shares are held by institutional investors. 17.3% of SEI Investments shares are held by insiders. Comparatively, 11.5% of Charles Schwab shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

SEI Investments beats Charles Schwab on 9 of the 17 factors compared between the two stocks.

SEI Investments Company Profile

SEI Investments Co. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides wealth management, retirement and investment solutions, asset management, asset administration, investment processing outsourcing solutions, financial services, and investment advisory services to its clients. It provides its services to private banks, independent financial advisers, institutional investors, investment managers, investment advisors, wealth management organizations, corporations, retirement scheme sponsors, not-for-profit organizations, hedge fund managers, registered investment advisers, independent broker-dealers, financial planners, life insurance agents, defined-benefit schemes, defined-contribution schemes, endowments, foundations, and board-designated fund, through its subsidiaries. Through its subsidiaries, the firm manages separate client-focused portfolios. It also launches and manages equity, fixed income, and balanced mutual funds, through its subsidiaries. Through its subsidiaries, the firm invests in public equity and fixed income markets. It employs fundamental and quantitative analysis with a focus on top-down and bottom-up analysis to make its investments, through its subsidiaries. SEI Investments Co. was founded in 1968 and is based in Oaks, Pennsylvania.

Charles Schwab Company Profile

The Charles Schwab Corporation, through its subsidiaries, provides wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The company operates through two segments, Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services, and other corporate brokerage services; equity compensation plan sponsors full-service recordkeeping for stock plans, stock options, restricted stock, performance shares, and stock appreciation rights; and retail investor, retirement plan, and mutual fund clearing services. The Advisor Services segment provides custodial, trading, and support services; and retirement business and corporate brokerage retirement services. This segment provides brokerage accounts with cash management capabilities; third-party mutual funds, as well as proprietary mutual funds, plus mutual fund trading, and clearing services to broker-dealers; and exchange-traded funds (ETFs), including proprietary and third-party ETFs. It also offers advice solutions, such as managed portfolios of proprietary and third-party mutual funds and ETFs, separately managed accounts, customized personal advice for tailored portfolios, and specialized planning and portfolio management. In addition, this segment provides banking products and services, including checking and savings accounts, certificates of deposit, first lien residential real estate mortgage loans, home equity loans and lines of credit, and pledged asset lines; and trust services comprising trust custody services, personal trust reporting services, and administrative trustee services. The company serves individuals and institutional clients in the United States, the Commonwealth of Puerto Rico, England, Hong Kong, Singapore, and Australia. The Charles Schwab Corporation was founded in 1971 and is headquartered in San Francisco, California.

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