T. Rowe Price Group, Inc. TROW appears to be a solid bet, given its focus on fortifying business through several initiatives such as launching investment strategies and vehicles, enhancing client-engagement capabilities in each distribution channel, strengthening distribution channels in the United States, EMEA, and the Asia Pacific, and improving its technology platform. The company’s mix shift toward international growth funds and debt-free position are anticipated to drive the stock.
Though T. Rowe Price’s expenses might escalate due to potential investments in technology and several initiatives, a sharper focus on organic growth is anticipated to make its growth path smoother.
The company has been witnessing upward estimate revisions, reflecting analysts’ optimism about its prospects. Over the past 30 days, the Zacks Consensus Estimate for its 2019 and 2020 earnings has inched up 0.4% and 2.2%, respectively.
Further, the Zacks Rank #2 (Buy) stock has gained around 33% year to date compared with 12.1% growth of the industry.
There are a number of other aspects, which make the stock an attractive investment option.
5 Factors That Make T. Rowe Price is an Attractive Buy
Revenue Growth: Organic growth remains a key strength for T. Rowe Price, as reflected in its revenue growth story. Its net revenues witnessed a 7.8% CAGR over the last five years (2014-2018).
Earnings Per Share Strength: T. Rowe Price witnessed earnings growth of 13.33% over the last three-five years. In addition, the company’s long-term (three-five years) estimated EPS growth rate of 8.98% promises rewards for investors. Also, it recorded a positive earnings surprise of 3.13%, on average, over the trailing four quarters.
Steady Capital Deployment: In February 2019, the company raised its quarterly common stock dividend by 8.6%. This marked T. Rowe Price’s 33rd consecutive annual dividend increase and reflected its commitment to return value to shareholders, with strong cash generation capabilities. Further, its board of directors increased the common share-repurchase authorization by 10 million shares, bringing the total authorization to 22.4 million shares.
Strong Leverage: T. Rowe Price’s debt/equity ratio is 0.02 compared with the industry average of 0.29, displaying no debt burden relative to the industry. It highlights the financial stability of the company, even in an unstable economic environment.
Superior Return on Equity (ROE): T. Rowe Price’s ROE of 28.84% compared with the industry average of 12.28% indicates its commendable position over its peers.
Other Stocks to Consider
TD Ameritrade Holding Corporation AMTD has been witnessing upward estimate revisions for the past 60 days. Moreover, this Zacks #2 Ranked stock has rallied more than 2% year to date. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
E*TRADE Financial Corporation ETFC has been witnessing upward estimate revisions for the past 60 days. Further, the company’s shares have gained 3.9% year to date. At present, it carries a Zacks Rank of 2.
BlackRock, Inc BLK has been witnessing upward estimate revisions for the past 60 days. Additionally, the stock has jumped around 28% year to date. It currently carries a Zacks Rank #2.
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