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
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>>
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 >>
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
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>>
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 >>
Get the latest research report on TROW - FREE
Get the latest research report on IVZ - FREE
Get the latest research report on CNS - FREE
Get the latest research report on SEIC - FREE