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Will Solid Equity Markets Aid T. Rowe Price (TROW) Q2 Earnings?
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T. Rowe Price (TROW - Free Report) is scheduled to report second-quarter 2020 results, before the bell on Jul 29. The company’s revenues and earnings are projected to reflect year-over-year increases.
In the last reported quarter, T. Rowe Price’s earnings outpaced the Zacks Consensus Estimate on higher revenues backed by an upsurge in investment advisory fees. However, escalating expenses were an undermining factor. Also, assets under management (AUM) declined year over year.
T. Rowe Price recorded earnings surprises in all of the trailing four quarters, the average beat being 4.76%.
Notably, the company’s activities in the second quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of $2.08 remained unchanged, over the last seven days. The figure indicates a year-over-year increase of 2.46%.
The Zacks Consensus Estimate for quarterly sales is pegged at $1.42 billion, suggesting an increase of 1.42% year over year.
Overall Inflows Likely: T. Rowe Price is likely to have witnessed net inflows on a combined basis, having recorded inflows in fixed income products, partly offset by continued outflows in other investment portfolios during the to-be-reported quarter.
Furthermore, equity markets put up an encouraging performance in the quarter, with the S&P 500 Index rallying around 20% sequentially. Therefore, the company’s results will likely reflect a rise in AUM on overall inflows and modest favorable market returns. Hence, investment advisory fees might have been positively impacted.
Administrative, service and distribution fees of $122 million suggest a 9.6% sequential decline.
Notably, the Zacks Consensus Estimate for AUM is pinned at $1.2 billion, up 3.4% on a sequential basis, while net cash outflows are projected at $2.9 billion compared with outflows of $6 billion recorded in the prior quarter.
Revenue Growth: T. Rowe Price’s efforts to improve its operating efficiency have resulted in year-over-year top-line growth, over the past few years. We believe the company is well poised to sustain this encouraging uptrend in the near term. This comes on the back of several planned initiatives largely tied with launching investment strategies and vehicles, enhancing client-engagement capabilities in each distribution channel, strengthening distribution channel in the United States, EMEA, and the Asia Pacific, and boosting its technology platform and deriving long-term cost efficiencies.
Rising Expenses: The company has not updated on anything related to its cost-control initiatives during the April-June period. It incurs significant expenditures to attract new investment advisory clients and additional investments from existing clients. T. Rowe Price expects a 1-4% expense rise for 2020. Notably, the company anticipates capital expenditures to be approximately $230 million, including three-fourth for technology development. Therefore, the quarterly results might reflect the impact of such projections as well.
Here is what our quantitative model predicts:
T. Rowe Price does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for T. Rowe Price is 0.00%.
Zacks Rank: T. Rowe Price currently sports a Zacks Rank of 1 (Strong Buy), which increases the predictive power of ESP. But we also need to have a positive ESP to be confident of a positive earnings surprise.
Banks Worth a Look
Here are a few bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Apollo Global Management, LLC (APO - Free Report) is set to release earnings figures on Jul 30. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +2.96%.
Fidelity National Information Services, Inc. (FIS - Free Report) is scheduled to release quarterly results on Aug 4. The company has an Earnings ESP of +2.86% and currently holds a Zacks Rank of 3.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Will Solid Equity Markets Aid T. Rowe Price (TROW) Q2 Earnings?
T. Rowe Price (TROW - Free Report) is scheduled to report second-quarter 2020 results, before the bell on Jul 29. The company’s revenues and earnings are projected to reflect year-over-year increases.
In the last reported quarter, T. Rowe Price’s earnings outpaced the Zacks Consensus Estimate on higher revenues backed by an upsurge in investment advisory fees. However, escalating expenses were an undermining factor. Also, assets under management (AUM) declined year over year.
T. Rowe Price recorded earnings surprises in all of the trailing four quarters, the average beat being 4.76%.
Notably, the company’s activities in the second quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of $2.08 remained unchanged, over the last seven days. The figure indicates a year-over-year increase of 2.46%.
The Zacks Consensus Estimate for quarterly sales is pegged at $1.42 billion, suggesting an increase of 1.42% year over year.
T. Rowe Price Group, Inc. Price and EPS Surprise
T. Rowe Price Group, Inc. price-eps-surprise | T. Rowe Price Group, Inc. Quote
Key Factors
Overall Inflows Likely: T. Rowe Price is likely to have witnessed net inflows on a combined basis, having recorded inflows in fixed income products, partly offset by continued outflows in other investment portfolios during the to-be-reported quarter.
Furthermore, equity markets put up an encouraging performance in the quarter, with the S&P 500 Index rallying around 20% sequentially. Therefore, the company’s results will likely reflect a rise in AUM on overall inflows and modest favorable market returns. Hence, investment advisory fees might have been positively impacted.
Administrative, service and distribution fees of $122 million suggest a 9.6% sequential decline.
Notably, the Zacks Consensus Estimate for AUM is pinned at $1.2 billion, up 3.4% on a sequential basis, while net cash outflows are projected at $2.9 billion compared with outflows of $6 billion recorded in the prior quarter.
Revenue Growth: T. Rowe Price’s efforts to improve its operating efficiency have resulted in year-over-year top-line growth, over the past few years. We believe the company is well poised to sustain this encouraging uptrend in the near term. This comes on the back of several planned initiatives largely tied with launching investment strategies and vehicles, enhancing client-engagement capabilities in each distribution channel, strengthening distribution channel in the United States, EMEA, and the Asia Pacific, and boosting its technology platform and deriving long-term cost efficiencies.
Rising Expenses: The company has not updated on anything related to its cost-control initiatives during the April-June period. It incurs significant expenditures to attract new investment advisory clients and additional investments from existing clients. T. Rowe Price expects a 1-4% expense rise for 2020. Notably, the company anticipates capital expenditures to be approximately $230 million, including three-fourth for technology development. Therefore, the quarterly results might reflect the impact of such projections as well.
Here is what our quantitative model predicts:
T. Rowe Price does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for T. Rowe Price is 0.00%.
Zacks Rank: T. Rowe Price currently sports a Zacks Rank of 1 (Strong Buy), which increases the predictive power of ESP. But we also need to have a positive ESP to be confident of a positive earnings surprise.
Banks Worth a Look
Here are a few bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Earnings ESP for UMB Financial Corporation (UMBF - Free Report) is +33.72% and the stock carries a Zacks Rank of 3, at present. The company is slated to report second-quarter numbers on Jul 28. You can see the complete list of today’s Zacks #1 Rank stocks here.
Apollo Global Management, LLC (APO - Free Report) is set to release earnings figures on Jul 30. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +2.96%.
Fidelity National Information Services, Inc. (FIS - Free Report) is scheduled to release quarterly results on Aug 4. The company has an Earnings ESP of +2.86% and currently holds a Zacks Rank of 3.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>