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T. Rowe Price's (TROW) Q3 Earnings Improve, Revenues Rise
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T. Rowe Price Group (TROW - Free Report) reported third-quarter 2018 adjusted earnings per share of $1.99, improving 37.2% from the year-ago figure of $1.45. The Zacks Consensus Estimate was $1.93.
Results were driven by higher revenues and assets under management (AUM). Moreover, the company’s strong liquidity position remains a key tailwind. However, escalating expenses were a concern.
Including certain non-recurring items, net income came in at $583 million or $2.30 per share compared with $390.9 million or $1.56 per share recorded a year ago.
Revenues Improve, Expenses Flare Up
Net revenues rose 12.6% to $1.39 billion from the year-ago quarter. The rise primarily stemmed from higher investment advisory fees that grew 15% year over year to $1.26 billion. Moreover, the net revenue figure surpassed the Zacks Consensus Estimate of $1.38 billion.
Administrative, distribution and servicing fees declined 6.1% year over year to $131.3 million.
Investment advisory revenues earned from the T. Rowe Price mutual funds, distributed in the United States, were up 11.6% year over year to $877.3 million. Investment advisory revenues earned from other investment portfolios, managed by the company, rose 23.4% to $386 million.
Total adjusted operating expenses flared up 9.1% year over year to $744.5 million in the third quarter. Rise in almost all components of expenses resulted in this upsurge. Including certain one-time items, expenses were $754 million, up 9.2%.
Strong Assets Position
As of Sep 30, 2018, total AUM climbed 14.3% year over year to $1.08 trillion. During the July-September quarter, net market appreciation and income came in at $37.1 billion while net cash inflow was $2.7 billion after client transfers.
T. Rowe Price remains debt free with substantial liquidity, including cash and sponsored portfolio investment holdings of about $5.2 billion as of Sep 30, 2018, which enables it to keep on investing.
Capital-Deployment Activity
During third-quarter 2018, T. Rowe Price repurchased 1.1 million shares of its common stock for $124.5 million and invested $121.5 million during the first nine months of 2018 in capitalized technology and facilities using available cash balances.
For 2018, the company projects capital expenditures to be approximately $170 million, comprising 70% for technology development.
Our Viewpoint
T. Rowe Price’s financial stability has the potential to benefit from growth opportunities in domestic and global AUM. The company’s debt-free position, higher return on earnings and improvement in investor sentiment, as a whole, make us confident of its robust fundamentals, moving ahead. Furthermore, a relatively better mutual fund performance is a positive.
T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise
Cohen & Steers’ (CNS - Free Report) third-quarter 2018 adjusted earnings came in at 64 cents per share, surpassing the Zacks Consensus Estimate by 2 cents. Earnings were 9.1% higher than the year-ago quarter tally.
SEI Investments Co.’s (SEIC - Free Report) third-quarter 2018 earnings of 80 cents per share surpassed the Zacks Consensus Estimate of 77 cents. Moreover, the figure grew 27% from the prior-year quarter.
Invesco (IVZ - Free Report) reported third-quarter 2018 adjusted earnings of 66 cents per share, lagging the Zacks Consensus Estimate by a penny. Also, the figure was 7% below the prior-year quarter level.
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T. Rowe Price's (TROW) Q3 Earnings Improve, Revenues Rise
T. Rowe Price Group (TROW - Free Report) reported third-quarter 2018 adjusted earnings per share of $1.99, improving 37.2% from the year-ago figure of $1.45. The Zacks Consensus Estimate was $1.93.
Results were driven by higher revenues and assets under management (AUM). Moreover, the company’s strong liquidity position remains a key tailwind. However, escalating expenses were a concern.
Including certain non-recurring items, net income came in at $583 million or $2.30 per share compared with $390.9 million or $1.56 per share recorded a year ago.
Revenues Improve, Expenses Flare Up
Net revenues rose 12.6% to $1.39 billion from the year-ago quarter. The rise primarily stemmed from higher investment advisory fees that grew 15% year over year to $1.26 billion. Moreover, the net revenue figure surpassed the Zacks Consensus Estimate of $1.38 billion.
Administrative, distribution and servicing fees declined 6.1% year over year to $131.3 million.
Investment advisory revenues earned from the T. Rowe Price mutual funds, distributed in the United States, were up 11.6% year over year to $877.3 million. Investment advisory revenues earned from other investment portfolios, managed by the company, rose 23.4% to $386 million.
Total adjusted operating expenses flared up 9.1% year over year to $744.5 million in the third quarter. Rise in almost all components of expenses resulted in this upsurge. Including certain one-time items, expenses were $754 million, up 9.2%.
Strong Assets Position
As of Sep 30, 2018, total AUM climbed 14.3% year over year to $1.08 trillion. During the July-September quarter, net market appreciation and income came in at $37.1 billion while net cash inflow was $2.7 billion after client transfers.
T. Rowe Price remains debt free with substantial liquidity, including cash and sponsored portfolio investment holdings of about $5.2 billion as of Sep 30, 2018, which enables it to keep on investing.
Capital-Deployment Activity
During third-quarter 2018, T. Rowe Price repurchased 1.1 million shares of its common stock for $124.5 million and invested $121.5 million during the first nine months of 2018 in capitalized technology and facilities using available cash balances.
For 2018, the company projects capital expenditures to be approximately $170 million, comprising 70% for technology development.
Our Viewpoint
T. Rowe Price’s financial stability has the potential to benefit from growth opportunities in domestic and global AUM. The company’s debt-free position, higher return on earnings and improvement in investor sentiment, as a whole, make us confident of its robust fundamentals, moving ahead. Furthermore, a relatively better mutual fund performance is a positive.
T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise
T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise | T. Rowe Price Group, Inc. Quote
Currently, T. Rowe Price carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Investment Managers
Cohen & Steers’ (CNS - Free Report) third-quarter 2018 adjusted earnings came in at 64 cents per share, surpassing the Zacks Consensus Estimate by 2 cents. Earnings were 9.1% higher than the year-ago quarter tally.
SEI Investments Co.’s (SEIC - Free Report) third-quarter 2018 earnings of 80 cents per share surpassed the Zacks Consensus Estimate of 77 cents. Moreover, the figure grew 27% from the prior-year quarter.
Invesco (IVZ - Free Report) reported third-quarter 2018 adjusted earnings of 66 cents per share, lagging the Zacks Consensus Estimate by a penny. Also, the figure was 7% below the prior-year quarter level.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>