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T. Rowe Price Group, Inc. (TROW - Free Report) has reported first-quarter 2023 adjusted earnings per share of $1.69, which outpaced the Zacks Consensus Estimate of $1.62. The bottom line, however, declined 35.5% year over year. Our estimate for earnings per share was $1.52.
TROW's net revenues were adversely impacted by the decline in assets under management (AUM) and investment advisory fees. Also, the company recorded a rise in expenses in the quarter. Nonetheless, appreciation in cash and cash equivalent will help the company to continue investing.
Net income attributable to T. Rowe Price was $421.5 million, down 25.8% from the prior-year quarter. Our estimate for the metric was $537 million.
Revenues Decrease, Expenses Rise
Net revenues in the first quarter decreased 17.5% to $1.54 billion from the year-ago quarter. The decline was mainly due to a fall in investment advisory fees. The top line surpassed the Zacks Consensus Estimate of $1.51 billion. Our estimate for total revenues was $1.51 billion.
Investment advisory fees fell 16.3% to $1.39 billion. Administrative, distribution and servicing fees decreased 61.9% to $16.9 million.
Total operating expenses increased 6.9% to $1.05 billion in the reported quarter.Our estimate for the metric was $1.05 billion.
As of Mar 31, 2023, T. Rowe Price employed 7,837 associates, up 3.5% from the prior-year quarter.
AUM Dips, Liquidity Position Strong
As of Mar 31, 2023, total AUM declined 13.5% year over year to $1.34 trillion. In the first quarter, net market depreciation and gains of $83.1 billion, and net cash outflow of $16.1 billion reduced TROW’s AUM.
T. Rowe Price had substantial liquidity, including cash and cash equivalent of $2.09 billion as of Mar 31, 2023, up from $1.75 billion as of Dec 31, 2022. This will enable TROW to keep investing.
Our View
A challenging operating backdrop and geopolitical concerns have affected TROW’s AUM in recent months. Going forward, the increased dependence on investment advisory fees is concerning, as market fluctuations and a sudden slowdown in overall business activities could hurt this revenue source. However, a diversified business model, focus on enhancing investment capabilities, broadening distribution reach and improving client partnerships will aid long-term growth.
T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2023 adjusted earnings of $7.93 per share surpassed the Zacks Consensus Estimate of $7.71. However, the figure reflects a decrease of 16.7% from the year-ago quarter. Our estimate for adjusted earnings was $7.37.
BLK's results benefited from a decline in expenses. However, lower revenues and AUM balance were major headwinds.
Invesco’s (IVZ - Free Report) first-quarter 2023 adjusted earnings of 38 cents per share surpassed the Zacks Consensus Estimate of 36 cents. The bottom line, however, plunged 32.1% from the prior-year quarter. Our estimate for earnings was 31 cents.
Results benefited from a decline in operating expenses. However, lower AUM balance and long-term outflows hurt IVZ’s revenues.
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T. Rowe Price (TROW) Q1 Earnings Beat Estimates, AUM Dips Y/Y
T. Rowe Price Group, Inc. (TROW - Free Report) has reported first-quarter 2023 adjusted earnings per share of $1.69, which outpaced the Zacks Consensus Estimate of $1.62. The bottom line, however, declined 35.5% year over year. Our estimate for earnings per share was $1.52.
TROW's net revenues were adversely impacted by the decline in assets under management (AUM) and investment advisory fees. Also, the company recorded a rise in expenses in the quarter. Nonetheless, appreciation in cash and cash equivalent will help the company to continue investing.
Net income attributable to T. Rowe Price was $421.5 million, down 25.8% from the prior-year quarter. Our estimate for the metric was $537 million.
Revenues Decrease, Expenses Rise
Net revenues in the first quarter decreased 17.5% to $1.54 billion from the year-ago quarter. The decline was mainly due to a fall in investment advisory fees. The top line surpassed the Zacks Consensus Estimate of $1.51 billion. Our estimate for total revenues was $1.51 billion.
Investment advisory fees fell 16.3% to $1.39 billion. Administrative, distribution and servicing fees decreased 61.9% to $16.9 million.
Total operating expenses increased 6.9% to $1.05 billion in the reported quarter.Our estimate for the metric was $1.05 billion.
As of Mar 31, 2023, T. Rowe Price employed 7,837 associates, up 3.5% from the prior-year quarter.
AUM Dips, Liquidity Position Strong
As of Mar 31, 2023, total AUM declined 13.5% year over year to $1.34 trillion. In the first quarter, net market depreciation and gains of $83.1 billion, and net cash outflow of $16.1 billion reduced TROW’s AUM.
T. Rowe Price had substantial liquidity, including cash and cash equivalent of $2.09 billion as of Mar 31, 2023, up from $1.75 billion as of Dec 31, 2022. This will enable TROW to keep investing.
Our View
A challenging operating backdrop and geopolitical concerns have affected TROW’s AUM in recent months. Going forward, the increased dependence on investment advisory fees is concerning, as market fluctuations and a sudden slowdown in overall business activities could hurt this revenue source. However, a diversified business model, focus on enhancing investment capabilities, broadening distribution reach and improving client partnerships will aid long-term growth.
T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise
T. Rowe Price Group, Inc. price-consensus-eps-surprise-chart | T. Rowe Price Group, Inc. Quote
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 Asset Managers
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2023 adjusted earnings of $7.93 per share surpassed the Zacks Consensus Estimate of $7.71. However, the figure reflects a decrease of 16.7% from the year-ago quarter. Our estimate for adjusted earnings was $7.37.
BLK's results benefited from a decline in expenses. However, lower revenues and AUM balance were major headwinds.
Invesco’s (IVZ - Free Report) first-quarter 2023 adjusted earnings of 38 cents per share surpassed the Zacks Consensus Estimate of 36 cents. The bottom line, however, plunged 32.1% from the prior-year quarter. Our estimate for earnings was 31 cents.
Results benefited from a decline in operating expenses. However, lower AUM balance and long-term outflows hurt IVZ’s revenues.