T. Rowe Price Group, Inc. (TROW - Free Report) reported positive earnings surprise of 0.8% for second-quarter 2017. Adjusted earnings per share of $1.28 outpaced the Zacks Consensus Estimate by a penny. Further, the bottom line improved 15.3% from the year-ago figure of $1.11.
Better-than-expected results were driven by higher revenues and assets under management (AUM). However, escalating expenses were a concern.
Including certain non-recurring items, net income came in at $373.9 million or $1.50 per share compared with $203.3 million or 79 cents per share recorded in the prior-year quarter.
Revenue Growth Recorded, Expenses Flare Up
Net revenue rose 12.1% to $1.17 billion from the year-ago quarter. The rise was primarily stemmed by higher investment advisory fees that grew 13.4% year over year to $1.04 billion. Moreover, net revenue surpassed the Zacks Consensus Estimate of $1.16 billion.
Distribution and servicing fees rose 2.2% to $36.4 million. In addition, administrative fees improved 3.2% to $91.3 million on a year-over-year basis.
Investment advisory revenues earned from the T. Rowe Price mutual funds, distributed in the U.S., were up 12.7% year over year to $754.3 million. Investment advisory revenues earned from other investment portfolios, managed by the company, rose 15.1% from the prior-year quarter to $289.6 million.
Total adjusted operating expenses were up 11.6% year over year to $662.3 million in the quarter. Including certain one-time items associated with the Dell appraisal rights matter, expenses were $664.0 million, down 12.8%.
As of Jun 30, 2017, T. Rowe Price employed 6,651 associates, 6.8% higher than the last year.
Strong Assets Position
As of Jun 30, 2017, total AUM climbed 16.4% year over year to $903.6 billion. During the quarter, net market appreciation and income, came in at $38.3 billion, while net cash inflow was $3.7 billion after client transfers.
T. Rowe Price remains debt free with substantial liquidity, including cash and sponsored portfolio investment holdings of about $3.6 billion as of Jun 30, 2017, which enable the company to keep on investing.
Capital Deployment Activity
During second-quarter 2017, T. Rowe Price repurchased 1.9 million shares of its common stock for $130.7 million, and invested $82.6 million during the first half of 2017 in capitalized technology and facilities using available cash balances.
For 2017, the company projects capital expenditures to be approximately $200 million, comprising two-third for technology development.
Our Viewpoint
T. Rowe Price’s financial stability has the potential to benefit from growth opportunities in the domestic and global AUM. The company’s debt-free position, higher return on earnings and improvement in investor sentiment, as a whole, makes us confident of its robust fundamentals, moving ahead. Furthermore, a relatively better mutual fund performance is a positive.
However, higher operating expenses and stringent regulatory norms remain concerns.
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.
Among other investment managers, Federated Investors, Inc. and Lazard Ltd. (LAZ - Free Report) are scheduled to report June quarter-end results on Jul 27, while Franklin Resources, Inc. (BEN - Free Report) will release quarterly numbers on Jul 28.
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
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T. Rowe Price Group, Inc. (TROW - Free Report) reported positive earnings surprise of 0.8% for second-quarter 2017. Adjusted earnings per share of $1.28 outpaced the Zacks Consensus Estimate by a penny. Further, the bottom line improved 15.3% from the year-ago figure of $1.11.
Better-than-expected results were driven by higher revenues and assets under management (AUM). However, escalating expenses were a concern.
Including certain non-recurring items, net income came in at $373.9 million or $1.50 per share compared with $203.3 million or 79 cents per share recorded in the prior-year quarter.
Revenue Growth Recorded, Expenses Flare Up
Net revenue rose 12.1% to $1.17 billion from the year-ago quarter. The rise was primarily stemmed by higher investment advisory fees that grew 13.4% year over year to $1.04 billion. Moreover, net revenue surpassed the Zacks Consensus Estimate of $1.16 billion.
Distribution and servicing fees rose 2.2% to $36.4 million. In addition, administrative fees improved 3.2% to $91.3 million on a year-over-year basis.
Investment advisory revenues earned from the T. Rowe Price mutual funds, distributed in the U.S., were up 12.7% year over year to $754.3 million. Investment advisory revenues earned from other investment portfolios, managed by the company, rose 15.1% from the prior-year quarter to $289.6 million.
Total adjusted operating expenses were up 11.6% year over year to $662.3 million in the quarter. Including certain one-time items associated with the Dell appraisal rights matter, expenses were $664.0 million, down 12.8%.
As of Jun 30, 2017, T. Rowe Price employed 6,651 associates, 6.8% higher than the last year.
Strong Assets Position
As of Jun 30, 2017, total AUM climbed 16.4% year over year to $903.6 billion. During the quarter, net market appreciation and income, came in at $38.3 billion, while net cash inflow was $3.7 billion after client transfers.
T. Rowe Price remains debt free with substantial liquidity, including cash and sponsored portfolio investment holdings of about $3.6 billion as of Jun 30, 2017, which enable the company to keep on investing.
Capital Deployment Activity
During second-quarter 2017, T. Rowe Price repurchased 1.9 million shares of its common stock for $130.7 million, and invested $82.6 million during the first half of 2017 in capitalized technology and facilities using available cash balances.
For 2017, the company projects capital expenditures to be approximately $200 million, comprising two-third for technology development.
Our Viewpoint
T. Rowe Price’s financial stability has the potential to benefit from growth opportunities in the domestic and global AUM. The company’s debt-free position, higher return on earnings and improvement in investor sentiment, as a whole, makes us confident of its robust fundamentals, moving ahead. Furthermore, a relatively better mutual fund performance is a positive.
However, higher operating expenses and stringent regulatory norms remain concerns.
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.
Among other investment managers, Federated Investors, Inc. and Lazard Ltd. (LAZ - Free Report) are scheduled to report June quarter-end results on Jul 27, while Franklin Resources, Inc. (BEN - Free Report) will release quarterly numbers on Jul 28.
More Stock News: Tech Opportunity Worth $386 Billion in 2017
From driverless cars to artificial intelligence, we've seen an unsurpassed growth of high-tech products in recent months. Yesterday's science-fiction is becoming today's reality. Despite all the innovation, there is a single component no tech company can survive without. Demand for this critical device will reach $387 billion this year alone, and it's likely to grow even faster in the future.
Zacks has released a brand-new Special Report to help you take advantage of this exciting investment opportunity. Most importantly, it reveals 4 stocks with massive profit potential. See these stocks now>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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