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T. Rowe Price Well Poised for Growth, Costs Remain a Worry
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On Sep 8, 2016, we issued an updated research report on T. Rowe Price Group, Inc. (TROW - Free Report) . Organic growth, steady capital deployment activities and diverse business models remain the company’s key strengths. However, its asset management business is undergoing cyclical pressure, along with margin compression in the current low rate environment.
Organic growth remains a key positive for T. Rowe Price. The company is focused on fortifying business through several planned initiatives. As a result, solid revenue growth is anticipated in the near term.
Further, the company’s diverse business model, continuous introduction of new funds and other investment portfolios continue to complement and expand the investment offerings from time to time.These also help the company to remain in sync with the varying needs of its clients.
Also, T. Rowe Price has been able to sustain positive earnings, despite the global financial crisis. Going forward, the mix shift toward international growth funds is also expected to help increase the company’s revenue and investment management margin
However, T. Rowe Price’s significant expenditures for attracting investment advisory clients and additional investments from existing clients remain a major concern. Moreover, the company’s increased dependence on investment advisory fees can adversely affect its financials in the near term.This is because changes in AUM,due to market fluctuations and foreign exchange translations, regulatory changes or a sudden slowdown in overall business activities could hurt this revenue source.
Notably, in order to maintain a positive yield for fund investors, the company continues to waive fees in its money market mutual funds and trusts.Also, the current low interest-rate scenario impacts the company’s fee income.
Over the past 30 days, the Zacks Consensus Estimate remained steady at $4.62 and $4.84 for 2016 and 2017, respectively.
Currently, T. Rowe Price carries a Zacks Rank #3 (Hold).
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T. Rowe Price Well Poised for Growth, Costs Remain a Worry
On Sep 8, 2016, we issued an updated research report on T. Rowe Price Group, Inc. (TROW - Free Report) . Organic growth, steady capital deployment activities and diverse business models remain the company’s key strengths. However, its asset management business is undergoing cyclical pressure, along with margin compression in the current low rate environment.
Organic growth remains a key positive for T. Rowe Price. The company is focused on fortifying business through several planned initiatives. As a result, solid revenue growth is anticipated in the near term.
Further, the company’s diverse business model, continuous introduction of new funds and other investment portfolios continue to complement and expand the investment offerings from time to time.These also help the company to remain in sync with the varying needs of its clients.
Also, T. Rowe Price has been able to sustain positive earnings, despite the global financial crisis. Going forward, the mix shift toward international growth funds is also expected to help increase the company’s revenue and investment management margin
However, T. Rowe Price’s significant expenditures for attracting investment advisory clients and additional investments from existing clients remain a major concern. Moreover, the company’s increased dependence on investment advisory fees can adversely affect its financials in the near term.This is because changes in AUM,due to market fluctuations and foreign exchange translations, regulatory changes or a sudden slowdown in overall business activities could hurt this revenue source.
Notably, in order to maintain a positive yield for fund investors, the company continues to waive fees in its money market mutual funds and trusts.Also, the current low interest-rate scenario impacts the company’s fee income.
Over the past 30 days, the Zacks Consensus Estimate remained steady at $4.62 and $4.84 for 2016 and 2017, respectively.
Currently, T. Rowe Price carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some better-ranked stocks in the finance space include Comerica Incorporated (CMA - Free Report) , Apollo Global Management, LLC (APO - Free Report) and Meta Financial Group, Inc. (CASH - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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