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T. Rowe Price Group, Inc. (TROW - Free Report) reported fourth-quarter 2022 adjusted earnings per share of $1.74, which outpaced the Zacks Consensus Estimate of $1.72. The bottom line, however, declined 45.1% year over year.
TROW's net revenues were adversely impacted by the decline in assets under management (AUM) and investment advisory fees. Also, the company recorded a rise in expenses during the quarter. Nonetheless, appreciation in cash and cash equivalent will help the company to continue investing.
Net income attributable to T. Rowe Price was $266 million, down 64.1% from the prior-year quarter.
In 2022, adjusted earnings of $8.02 per share beat the consensus estimate of $7.98 but declined 37.1% year over year. Net income attributable to T. Rowe Price was $1.56 billion, plunging 49.5%.
Revenues Decrease, Expenses Rise
Net revenues in the fourth quarter decreased 22.3% to $1.52 billion from the year-ago quarter. The decline was mainly due to a fall in investment advisory fees. The top line also missed the Zacks Consensus Estimate of $1.53 billion.
In 2022, net revenues were $6.49 billion, down 15.4% year over year. The top line, however, marginally beat the consensus estimate of $6.48 billion.
Investment advisory fees fell 24.4% to $1.37 billion. Administrative, distribution and servicing fees decreased 14.9% to $129.4 million.
Total operating expenses increased 15.6% to $1.27 billion in the reported quarter.
As of Dec 31, 2022, T. Rowe Price employed 7,868 associates, up 4.5% from the end of 2021.
AUM Dips, Liquidity Position Strong
As of Dec 31, 2022, total AUM declined 24.5% year over year to $1.27 trillion. In the December-end quarter, net market depreciation and net distributions not reinvested of $61.8 billion, and net cash outflow of $17.1 billion reduced TROW’s AUM.
T. Rowe Price had substantial liquidity, including cash and cash equivalent of $1.76 billion as of Dec 31, 2022, up from $1.52 billion as of Dec 31, 2021. This will enable TROW to keep investing.
Share Repurchase Update
In the reported quarter, T. Rowe Price repurchased 1 million shares of its common stock for $111.3 million.
Our View
A challenging operating backdrop and geopolitical concerns have affected TROW’s AUM in recent months. Going forward, the increased dependence on investment advisory fees is concerning, as market fluctuations and a sudden slowdown in overall business activities could hurt this revenue source. However, a diversified business model, focus on enhancing investment capabilities, broadening distribution reach and improving client partnerships will aid long-term growth.
T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise
BlackRock, Inc.’s (BLK - Free Report) fourth-quarter 2022 adjusted earnings of $8.93 per share surpassed the Zacks Consensus Estimate of $7.99. The figure reflects a decrease of 16.4% from the year-ago quarter.
The quarterly results benefited from a decline in expenses. However, lower revenues and AUM balance were the major headwinds for BLK.
Invesco’s (IVZ - Free Report) fourth-quarter 2022 adjusted earnings of 39 cents per share surpassed the Zacks Consensus Estimate of 36 cents. The bottom line, however, plunged 54.7% from the prior-year quarter. Our estimate for earnings was 33 cents.
Results benefited from a decline in operating expenses. On the other hand, lower AUM balance and long-term outflows hurt IVZ’s revenues.
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T. Rowe Price (TROW) Q4 Earnings Beat Estimates, AUM Dips Y/Y
T. Rowe Price Group, Inc. (TROW - Free Report) reported fourth-quarter 2022 adjusted earnings per share of $1.74, which outpaced the Zacks Consensus Estimate of $1.72. The bottom line, however, declined 45.1% year over year.
TROW's net revenues were adversely impacted by the decline in assets under management (AUM) and investment advisory fees. Also, the company recorded a rise in expenses during the quarter. Nonetheless, appreciation in cash and cash equivalent will help the company to continue investing.
Net income attributable to T. Rowe Price was $266 million, down 64.1% from the prior-year quarter.
In 2022, adjusted earnings of $8.02 per share beat the consensus estimate of $7.98 but declined 37.1% year over year. Net income attributable to T. Rowe Price was $1.56 billion, plunging 49.5%.
Revenues Decrease, Expenses Rise
Net revenues in the fourth quarter decreased 22.3% to $1.52 billion from the year-ago quarter. The decline was mainly due to a fall in investment advisory fees. The top line also missed the Zacks Consensus Estimate of $1.53 billion.
In 2022, net revenues were $6.49 billion, down 15.4% year over year. The top line, however, marginally beat the consensus estimate of $6.48 billion.
Investment advisory fees fell 24.4% to $1.37 billion. Administrative, distribution and servicing fees decreased 14.9% to $129.4 million.
Total operating expenses increased 15.6% to $1.27 billion in the reported quarter.
As of Dec 31, 2022, T. Rowe Price employed 7,868 associates, up 4.5% from the end of 2021.
AUM Dips, Liquidity Position Strong
As of Dec 31, 2022, total AUM declined 24.5% year over year to $1.27 trillion. In the December-end quarter, net market depreciation and net distributions not reinvested of $61.8 billion, and net cash outflow of $17.1 billion reduced TROW’s AUM.
T. Rowe Price had substantial liquidity, including cash and cash equivalent of $1.76 billion as of Dec 31, 2022, up from $1.52 billion as of Dec 31, 2021. This will enable TROW to keep investing.
Share Repurchase Update
In the reported quarter, T. Rowe Price repurchased 1 million shares of its common stock for $111.3 million.
Our View
A challenging operating backdrop and geopolitical concerns have affected TROW’s AUM in recent months. Going forward, the increased dependence on investment advisory fees is concerning, as market fluctuations and a sudden slowdown in overall business activities could hurt this revenue source. However, a diversified business model, focus on enhancing investment capabilities, broadening distribution reach and improving client partnerships will aid long-term growth.
T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise
T. Rowe Price Group, Inc. price-consensus-eps-surprise-chart | T. Rowe Price Group, Inc. Quote
Currently, T. Rowe Price carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
BlackRock, Inc.’s (BLK - Free Report) fourth-quarter 2022 adjusted earnings of $8.93 per share surpassed the Zacks Consensus Estimate of $7.99. The figure reflects a decrease of 16.4% from the year-ago quarter.
The quarterly results benefited from a decline in expenses. However, lower revenues and AUM balance were the major headwinds for BLK.
Invesco’s (IVZ - Free Report) fourth-quarter 2022 adjusted earnings of 39 cents per share surpassed the Zacks Consensus Estimate of 36 cents. The bottom line, however, plunged 54.7% from the prior-year quarter. Our estimate for earnings was 33 cents.
Results benefited from a decline in operating expenses. On the other hand, lower AUM balance and long-term outflows hurt IVZ’s revenues.