T. Rowe Price Group

T. Rowe Price Group, Inc. (TROW - Analyst Report) is outperforming the market on a rising Zacks Consensus Estimate. The company recently announced that it will buy a stake in Indian asset manager and mutual fund company UTI Asset Management.

Company Description

T. Rowe Price Group, Inc. is a global investment management organization that provides a broad array of mutual funds, subadvisory services and separate account management for individual and institutional investors, retirement plans and financial intermediaries.

The company offers a variety of sophisticated investment planning and guidance tools. T. Rowe Price's disciplined, risk-aware investment approach focuses on diversification, style consistency, and fundamental research.

Recent Acquisition

The company recently announced that it will buy a 26% stake in UTI Asset Management Company Limited and UTI Trustee Company Pvt. Ltd. for approximately $138 million based on current exchange rates. The transaction is expected to close in the fourth quarter of 2009.

Management said the acquisition provides T. Rowe Price with an opportunity to participate directly in the tremendous growth potential of India's asset management industry. India's economic growth rate is second only to China's among large economies and its working-age population is expanding rapidly. The country's high savings rate and demographics favor strong growth in mutual fund investing over time.

Bullish Forecasts

Analysts polled by Zacks have been hiking earnings estimates. The current full-year projection of $1.63 per share is up from $1.48 over the past 60 days. For 2010, the Zacks Consensus Estimate of $2.39 per share climbed from $2.07 over the past 60 days.

Shares Jump on Third Quarter Results

T. Rowe Price saw a nice spike after announcing third-quarter results. During the past year, the stock nearly doubled the market's return.

Earnings per share of 50 cents were below last year’s 56 cents but topped the Zacks Consensus Estimate by 9%.

The company also reported a 16% increase in assets under management, totaling $366.2 billion.

Management noted that firm's investment advisory results relative to peers remain strong, with 87% of the T. Rowe Price funds across their share classes surpassing their comparable Lipper averages on a total return basis for the 5-year period ended September 30, 2009, 83% outperforming for the 3-year period and at least 79% outperforming for the 1- and 10-year periods.

The company also stated that it remains debt-free with substantial liquidity, including cash and mutual fund investment holdings of $1.4 billion that supports TROW’s ability to continue investing for the future.

Stellar Fundamentals

In addition to having a balance sheet that shows no debt, TROW offers a solid return on equity (ROE) of 12.7%, which soars past the industry average of 6%. The company’s net profit margin of 17.5% soars past the industry average of 3%. This Growth and Income pick also pays an industry-leading dividend yield of 2%.

Alex Kolb is the Growth & Income Stock Strategist for Zacks.com. He also writes the popular daily commentary column for the ZacksElite.com service.

Read the full analyst report on TROW