On Dec 30, 2019, we issued an updated research report on T. Rowe Price Group, Inc. TROW. The company’s robust organic growth and initiatives to expand business make us optimistic about its prospects.
Though rising expenses are a major concern, the company’s efforts to gain investor confidence through steady capital deployment activities are encouraging.
The company’s shares have gained 31.9% in the past year, outperforming 12.1% growth of the industry it belongs to. Moreover, the Zacks Consensus Estimate for current-year earnings has been revised 0.4% upward over the past 30 days and 2.2% for 2020. This uptrend substantiates its Zacks Rank #2 (Buy).
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T. Rowe Price is committed to bolster its business through new investment strategies and vehicles along with strengthening its distribution channels in the United States, EMEA and Asia Pacific, improving technology platform and deriving long-term cost efficiencies.
Further, organic growth is a key driver at T. Rowe Price, evident from its revenue growth. Net revenues saw a CAGR of 7.8% over the last five years (2014-2018). The company benefits from its diverse business model and its mix shift toward international growth funds is also expected to boost both revenue and investment-management margins.
Moreover, the company’s debt-free position and strong liquidity keep it well-poised to undertake strategic investments and growth opportunities in the future. Also, these tailwinds enable it to enhance its shareholder value through efficient capital deployment activities. In February 2019, the company hiked its quarterly common stock dividend by 8.6%.
However, persistently escalating expenses due to T. Rowe Price’s strategic efforts to attract investments from clients might affect its bottom-line growth. Also, overdependence on investment advisory fees (comprising about 90% of its net revenues) as a revenue source is another major lingering woe.
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E*TRADE Financial Corporation ETFC has been witnessing northbound estimate revisions for the past 60 days. Further, the company’s shares have inched up 3.4% in the past year. At present, it is a #2 Ranked player.
BlackRock, Inc BLK has been witnessing northward estimate revisions for the past 60 days. Additionally, the stock has jumped 27.5% in the past year. It currently holds a Zacks Rank of 2.
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