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What's in Store for T. Rowe Price (TROW) in Q2 Earnings?
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T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to report second-quarter 2023 results before the opening bell on Jul 28. TROW’s quarterly revenues are expected to have witnessed a year-over-year improvement while its earnings are likely to have declined.
In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. However, net revenues declined because of a fall in assets under management (AUM) and investment advisory fees.
T. Rowe Price’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and lagged once, the average negative surprise being 3.24%.
TROW’s activities in the to-be-reported quarter won analysts’ confidence. As a result, the Zacks Consensus Estimate for second-quarter earnings of $1.71 per share has moved 1% upward over the past seven days. However, the figure indicates a decline of 4.5% from the year-ago quarter’s reported figure. Our estimate for the metric is $1.67.
The consensus estimate for revenues of $1.58 billion indicates 4.3% growth from the prior-year quarter’s reported number. Our estimate is $1.55 billion.
Key Factors & Estimates for Q2
The performance of asset managers in the second quarter is expected to have been supported by favorable equity markets. In fact, S&P 500 Index increased 8.3% sequentially in the quarter, indicating impressive market performance.
However, challenges in investment management industry accompanied by an economic slowdown are likely to affect results in the to-be-reported quarter. Moreover, fixed-income markets saw negative performances during the quarter.
Amid the challenging operating environment, T. Rowe Price is likely to have continued to record net outflows in the second quarter. Per the company’s monthly metrics data, it recorded net outflows of $20 billion in the quarter under review.
Despite this, as of Jun 30, 2023, TROW’s preliminary AUM balance of $1.4 trillion indicates a rise of 4.2% from the March-end figure.
Given growth in AUM, the Zacks Consensus Estimate for investment advisory fees of $1.43 billion suggests an increase of 2.4% from the previous quarter’s reported figure. Our projection for the same is $1.44 billion.
Also, the consensus estimate for administrative, distribution and servicing fees of $136 million implies a climb of 5.4% sequentially. Our estimate for the metric is $138 million.
Coming to expenses, T. Rowe Price is expected to have incurred higher employee compensation costs due to rising salaries on account of inflation. The company’s initiatives to attract investment advisory clients and additional investments from its existing clients are expected to have led to significant expenditure. Thus, overall expenses are expected to have risen in the quarter under review, impeding bottom-line growth. Our estimate for operating expenses (GAAP basis) is $1.07 billion.
Key Development During the Quarter
In April, T. Rowe Price completed the acquisition of Retiree, Inc., a fintech firm providing innovative retirement income planning software.
TROW offers leading capabilities in multi-asset investing, portfolio construction and glide path strategies across different life stages. Hence, Retiree's retirement income planning software is expected to complement and expand T. Rowe Price’s existing retirement capabilities, enabling a comprehensive suite of retirement income solutions for investors and practitioner tools for financial professionals.
What the Zacks Model Unveils
According to our proven model, chances of T. Rowe Price beating the Zacks Consensus Estimate for earnings this time are high. This is because the company has the right combination of the two key ingredients — a positive Earnings ESP and a 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: T. Rowe Price has an Earnings ESP of +0.41%.
Zacks Rank: T. Rowe Price currently carries a Zacks Rank of 2 (Buy).
Other Stocks to Consider
First Citizens BancShares, Inc. (FCNCA - Free Report) and Ares Management Corporation (ARES - Free Report) are a couple of other stocks that you may also want to consider as our model shows that these too have the right combination of elements to post an earnings beat in their upcoming releases.
The Earnings ESP for FCNCA is +3.21% and the stock currently carries a Zacks Rank #3. It is slated to report second-quarter 2023 results on Aug 3.
The Zacks Consensus Estimate for FCNCA’s second-quarter earnings has moved 4.3% south over the past 30 days.
Image: Bigstock
What's in Store for T. Rowe Price (TROW) in Q2 Earnings?
T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to report second-quarter 2023 results before the opening bell on Jul 28. TROW’s quarterly revenues are expected to have witnessed a year-over-year improvement while its earnings are likely to have declined.
In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. However, net revenues declined because of a fall in assets under management (AUM) and investment advisory fees.
T. Rowe Price’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and lagged once, the average negative surprise being 3.24%.
T. Rowe Price Group, Inc. Price and EPS Surprise
T. Rowe Price Group, Inc. price-eps-surprise | T. Rowe Price Group, Inc. Quote
T. Rowe Price Group, Inc. Price and EPS Surprise
TROW’s activities in the to-be-reported quarter won analysts’ confidence. As a result, the Zacks Consensus Estimate for second-quarter earnings of $1.71 per share has moved 1% upward over the past seven days. However, the figure indicates a decline of 4.5% from the year-ago quarter’s reported figure. Our estimate for the metric is $1.67.
The consensus estimate for revenues of $1.58 billion indicates 4.3% growth from the prior-year quarter’s reported number. Our estimate is $1.55 billion.
Key Factors & Estimates for Q2
The performance of asset managers in the second quarter is expected to have been supported by favorable equity markets. In fact, S&P 500 Index increased 8.3% sequentially in the quarter, indicating impressive market performance.
However, challenges in investment management industry accompanied by an economic slowdown are likely to affect results in the to-be-reported quarter. Moreover, fixed-income markets saw negative performances during the quarter.
Amid the challenging operating environment, T. Rowe Price is likely to have continued to record net outflows in the second quarter. Per the company’s monthly metrics data, it recorded net outflows of $20 billion in the quarter under review.
Despite this, as of Jun 30, 2023, TROW’s preliminary AUM balance of $1.4 trillion indicates a rise of 4.2% from the March-end figure.
Given growth in AUM, the Zacks Consensus Estimate for investment advisory fees of $1.43 billion suggests an increase of 2.4% from the previous quarter’s reported figure. Our projection for the same is $1.44 billion.
Also, the consensus estimate for administrative, distribution and servicing fees of $136 million implies a climb of 5.4% sequentially. Our estimate for the metric is $138 million.
Coming to expenses, T. Rowe Price is expected to have incurred higher employee compensation costs due to rising salaries on account of inflation. The company’s initiatives to attract investment advisory clients and additional investments from its existing clients are expected to have led to significant expenditure. Thus, overall expenses are expected to have risen in the quarter under review, impeding bottom-line growth. Our estimate for operating expenses (GAAP basis) is $1.07 billion.
Key Development During the Quarter
In April, T. Rowe Price completed the acquisition of Retiree, Inc., a fintech firm providing innovative retirement income planning software.
TROW offers leading capabilities in multi-asset investing, portfolio construction and glide path strategies across different life stages. Hence, Retiree's retirement income planning software is expected to complement and expand T. Rowe Price’s existing retirement capabilities, enabling a comprehensive suite of retirement income solutions for investors and practitioner tools for financial professionals.
What the Zacks Model Unveils
According to our proven model, chances of T. Rowe Price beating the Zacks Consensus Estimate for earnings this time are high. This is because the company has the right combination of the two key ingredients — a positive Earnings ESP and a 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: T. Rowe Price has an Earnings ESP of +0.41%.
Zacks Rank: T. Rowe Price currently carries a Zacks Rank of 2 (Buy).
Other Stocks to Consider
First Citizens BancShares, Inc. (FCNCA - Free Report) and Ares Management Corporation (ARES - Free Report) are a couple of other stocks that you may also want to consider as our model shows that these too have the right combination of elements to post an earnings beat in their upcoming releases.
The Earnings ESP for FCNCA is +3.21% and the stock currently carries a Zacks Rank #3. It is slated to report second-quarter 2023 results on Aug 3.
The Zacks Consensus Estimate for FCNCA’s second-quarter earnings has moved 4.3% south over the past 30 days.
ARES currently has an Earnings ESP of +0.20% and a Zacks Rank #3. It is scheduled to release second-quarter 2023 results on Aug 1.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for ARES’s second-quarter earnings has moved 2.3% south over the past month.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.