T. Rowe Price Group (TROW - Free Report) reported fourth-quarter 2018 adjusted earnings per share of $1.54, up 1.3% from the year-ago figure of $1.52. The Zacks Consensus Estimate was pegged at $1.68.
Results were driven by higher revenues. Moreover, the company’s strong liquidity position was a key tailwind. However, escalating expenses and lower assets under management (AUM) posed key concerns.
Including certain non-recurring items, net income came in at $351.9 million or $1.41 per share compared with $347.1 million or $1.37 per share recorded a year ago.
For full-year 2018, the company reported GAAP net income of $1.84 billion or $7.27 per share, up from $1.36 million or $5.97 per share.
Revenues Improve, Expenses Flare Up
Net revenues rose nearly 1% to $1.31 billion from the year-ago quarter. The rise primarily stemmed from higher investment advisory fees that grew 2.2% year over year to $1.18 billion. However, the net revenue figure lagged the Zacks Consensus Estimate of $1.32 billion.
For full-year 2018, the company reported net revenues of $5.37 billion, up 10.7% on a year-over-year basis. However, the figure lagged the Zacks Consensus Estimate of $5.40 billion.
Administrative, distribution and servicing fees declined 13% year over year to $121.3 million.
Investment advisory revenues earned from the T. Rowe Price mutual funds, distributed in the United States, were down slightly year over year to $817.9 million. However, Investment advisory revenues earned from other investment portfolios, managed by the company, rose 8.2% to $365.8 million.
Total adjusted operating expenses flared up 4.7% year over year to $794.7 million in the fourth quarter. Rise in almost all components of expenses resulted in this upsurge. Including certain one-time items, expenses were up slightly to $762.7 million.
Strong Assets Position
As of Dec 31, 2018, total AUM declined 2.9% year over year to $962.3 billion. During the fourth quarter, net market depreciation and income came in at $110.8 billion while net cash outflow was $8.4 billion after client transfers.
T. Rowe Price remains debt free with substantial liquidity, including cash and sponsored portfolio investment holdings of about $4.5 billion as of Dec 31, 2018. This enables it to keep on investing.
Capital-Deployment Activity
During fourth-quarter 2018, T. Rowe Price repurchased 5.5 million shares of its common stock for $534.8 million and invested $168.5 million in the year in capitalized technology and facilities using available cash balances.
For 2019, the company projects capital expenditures to be approximately $200 million, comprising 65% 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 prospects. 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 #3 (Hold). 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) fourth-quarter 2018 adjusted earnings came in at 56 cents per share, missing the Zacks Consensus Estimate of 60 cents. However, the bottom line was 1.8% higher than the year-ago quarter figure.
TD Ameritrade Holding Corp. (AMTD - Free Report) delivered a positive earnings surprise of 11% in first-quarter fiscal 2019 (ending Dec 31, 2018). The company reported earnings of $1.11 per share, beating the Zacks Consensus Estimate of $1.00. Moreover, the figure jumped 39% from the prior-year quarter.
Federated Investors, Inc. delivered a positive earnings surprise of 1.7% in fourth-quarter 2018. Earnings per share of 61 cents surpassed the Zacks Consensus Estimate of 60 cents. However, the figure compares unfavorably with the prior-year quarter earnings of $1.31.
Zacks' Top 10 Stocks for 2019
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From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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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 fourth-quarter 2018 adjusted earnings per share of $1.54, up 1.3% from the year-ago figure of $1.52. The Zacks Consensus Estimate was pegged at $1.68.
Results were driven by higher revenues. Moreover, the company’s strong liquidity position was a key tailwind. However, escalating expenses and lower assets under management (AUM) posed key concerns.
Including certain non-recurring items, net income came in at $351.9 million or $1.41 per share compared with $347.1 million or $1.37 per share recorded a year ago.
For full-year 2018, the company reported GAAP net income of $1.84 billion or $7.27 per share, up from $1.36 million or $5.97 per share.
Revenues Improve, Expenses Flare Up
Net revenues rose nearly 1% to $1.31 billion from the year-ago quarter. The rise primarily stemmed from higher investment advisory fees that grew 2.2% year over year to $1.18 billion. However, the net revenue figure lagged the Zacks Consensus Estimate of $1.32 billion.
For full-year 2018, the company reported net revenues of $5.37 billion, up 10.7% on a year-over-year basis. However, the figure lagged the Zacks Consensus Estimate of $5.40 billion.
Administrative, distribution and servicing fees declined 13% year over year to $121.3 million.
Investment advisory revenues earned from the T. Rowe Price mutual funds, distributed in the United States, were down slightly year over year to $817.9 million. However, Investment advisory revenues earned from other investment portfolios, managed by the company, rose 8.2% to $365.8 million.
Total adjusted operating expenses flared up 4.7% year over year to $794.7 million in the fourth quarter. Rise in almost all components of expenses resulted in this upsurge. Including certain one-time items, expenses were up slightly to $762.7 million.
Strong Assets Position
As of Dec 31, 2018, total AUM declined 2.9% year over year to $962.3 billion. During the fourth quarter, net market depreciation and income came in at $110.8 billion while net cash outflow was $8.4 billion after client transfers.
T. Rowe Price remains debt free with substantial liquidity, including cash and sponsored portfolio investment holdings of about $4.5 billion as of Dec 31, 2018. This enables it to keep on investing.
Capital-Deployment Activity
During fourth-quarter 2018, T. Rowe Price repurchased 5.5 million shares of its common stock for $534.8 million and invested $168.5 million in the year in capitalized technology and facilities using available cash balances.
For 2019, the company projects capital expenditures to be approximately $200 million, comprising 65% 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 prospects. 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 #3 (Hold). 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) fourth-quarter 2018 adjusted earnings came in at 56 cents per share, missing the Zacks Consensus Estimate of 60 cents. However, the bottom line was 1.8% higher than the year-ago quarter figure.
TD Ameritrade Holding Corp. (AMTD - Free Report) delivered a positive earnings surprise of 11% in first-quarter fiscal 2019 (ending Dec 31, 2018). The company reported earnings of $1.11 per share, beating the Zacks Consensus Estimate of $1.00. Moreover, the figure jumped 39% from the prior-year quarter.
Federated Investors, Inc. delivered a positive earnings surprise of 1.7% in fourth-quarter 2018. Earnings per share of 61 cents surpassed the Zacks Consensus Estimate of 60 cents. However, the figure compares unfavorably with the prior-year quarter earnings of $1.31.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>
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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