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6 Reasons to Invest in T. Rowe Price (TROW) Stock Right Now
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T. Rowe Price Group, Inc. (TROW - Free Report) appears to be a solid bet, driven by its solid asset under management (AUM) balance, business diversification initiatives, acquisitions and global reach. Further, its decent liquidity position helps to sustain steady capital deployments.
The Zacks Consensus Estimate for T. Rowe Price's 2023 and 2024 earnings has been revised 4.9% and 6% upward over the past 30 days, respectively. This shows that analysts are optimistic regarding the company’s earnings growth prospects. TROW currently sports a Zacks Rank #1 (Strong Buy).
Over the past three months, shares of the company have gained 5.7% compared with the industry's upside of 12.3%.
Image Source: Zacks Investment Research
Mentioned below are a few factors that make TROW a must-buy stock now:
Revenue Strength: Organic growth is a key strength for T. Rowe Price, as reflected in its revenue growth history. Its net revenues witnessed a 2.2% compound annual growth rate (CAGR) over the last three years (ended 2022). Though the trend reversed in the first six months of 2023, the company’s focus on fortifying its business by enhancing investment capabilities and broadening distribution reach will support the top line.
Given the tough operating backdrop, we project net revenues to decline 2.5% this year but with the growth initiatives undertaken by the company, revenues are expected to rise 1.6% the next year.
AUM Growth: The company’s AUM balance witnessed a CAGR of 5.2% over the past five years (2017-2022), with the momentum continuing in the first half of 2023. Our model projects AUM to increase at a CAGR of 2.7% over the next three years.
Strong Leverage: T. Rowe Price’s debt/equity ratio is 0.00 compared with the industry average of 0.05, displaying no debt burden relative to the industry. It highlights the financial stability of the company, even in an unstable economic environment.
Superior Return on Equity (ROE): T. Rowe Price’s ROE is 18.30% compared with the industry average of 13.77%. This shows that the company reinvests its cash more efficiently than its peers.
Strategic Expansion Initiatives: TROW has expanded inorganically, which bodes well for the future. This April, it acquired Retiree, which is expected to expand its existing retirement capabilities, enabling a comprehensive suite of retirement income solutions for investors and practitioner tools for financial professionals. Further, in 2021, T. Rowe Price acquired OHA. With this acquisition, it bulked up its offerings in the alternative investment market space.
Encouraging Capital Deployment Activities: T. Rowe Price pays quarterly dividends on a regular basis. It has hiked quarterly dividends every year since its IPO in 1986, the most recent being a sequential hike of 1.6% in February 2023 to $1.22 per share. Based on the last day’s closing price of $112.33, the company's current annualized dividend yield stands at 4.3%.
The company has a share repurchase authorization in place. In 2020, TROW increased the common share repurchase authorization by 10 million shares, bringing the total authorization to 22.4 million shares. As of Jun 30, 2023, nearly 8.35 million shares remained available under the authorization.
Other Asset Managers Worth a Look
A couple of other top-ranked stocks from the asset management space are SEI Investments (SEIC - Free Report) and Hamilton Lane (HLNE - Free Report) .
The Zacks Consensus Estimate for SEI Investments’ current-year earnings has been revised marginally upward over the past seven days. Its shares have gained 5.6% in the past three months. Currently, SEIC carries a Zacks Rank #2 (Buy).
Hamilton Lane sports a Zacks Rank #1 at present. Its earnings estimates for 2023 have been revised 14.5% upward over the past 30 days. In the past three months, HLNE shares have rallied 41.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
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6 Reasons to Invest in T. Rowe Price (TROW) Stock Right Now
T. Rowe Price Group, Inc. (TROW - Free Report) appears to be a solid bet, driven by its solid asset under management (AUM) balance, business diversification initiatives, acquisitions and global reach. Further, its decent liquidity position helps to sustain steady capital deployments.
The Zacks Consensus Estimate for T. Rowe Price's 2023 and 2024 earnings has been revised 4.9% and 6% upward over the past 30 days, respectively. This shows that analysts are optimistic regarding the company’s earnings growth prospects. TROW currently sports a Zacks Rank #1 (Strong Buy).
Over the past three months, shares of the company have gained 5.7% compared with the industry's upside of 12.3%.
Image Source: Zacks Investment Research
Mentioned below are a few factors that make TROW a must-buy stock now:
Revenue Strength: Organic growth is a key strength for T. Rowe Price, as reflected in its revenue growth history. Its net revenues witnessed a 2.2% compound annual growth rate (CAGR) over the last three years (ended 2022). Though the trend reversed in the first six months of 2023, the company’s focus on fortifying its business by enhancing investment capabilities and broadening distribution reach will support the top line.
Given the tough operating backdrop, we project net revenues to decline 2.5% this year but with the growth initiatives undertaken by the company, revenues are expected to rise 1.6% the next year.
AUM Growth: The company’s AUM balance witnessed a CAGR of 5.2% over the past five years (2017-2022), with the momentum continuing in the first half of 2023. Our model projects AUM to increase at a CAGR of 2.7% over the next three years.
Strong Leverage: T. Rowe Price’s debt/equity ratio is 0.00 compared with the industry average of 0.05, displaying no debt burden relative to the industry. It highlights the financial stability of the company, even in an unstable economic environment.
Superior Return on Equity (ROE): T. Rowe Price’s ROE is 18.30% compared with the industry average of 13.77%. This shows that the company reinvests its cash more efficiently than its peers.
Strategic Expansion Initiatives: TROW has expanded inorganically, which bodes well for the future. This April, it acquired Retiree, which is expected to expand its existing retirement capabilities, enabling a comprehensive suite of retirement income solutions for investors and practitioner tools for financial professionals. Further, in 2021, T. Rowe Price acquired OHA. With this acquisition, it bulked up its offerings in the alternative investment market space.
Encouraging Capital Deployment Activities: T. Rowe Price pays quarterly dividends on a regular basis. It has hiked quarterly dividends every year since its IPO in 1986, the most recent being a sequential hike of 1.6% in February 2023 to $1.22 per share. Based on the last day’s closing price of $112.33, the company's current annualized dividend yield stands at 4.3%.
The company has a share repurchase authorization in place. In 2020, TROW increased the common share repurchase authorization by 10 million shares, bringing the total authorization to 22.4 million shares. As of Jun 30, 2023, nearly 8.35 million shares remained available under the authorization.
Other Asset Managers Worth a Look
A couple of other top-ranked stocks from the asset management space are SEI Investments (SEIC - Free Report) and Hamilton Lane (HLNE - Free Report) .
The Zacks Consensus Estimate for SEI Investments’ current-year earnings has been revised marginally upward over the past seven days. Its shares have gained 5.6% in the past three months. Currently, SEIC carries a Zacks Rank #2 (Buy).
Hamilton Lane sports a Zacks Rank #1 at present. Its earnings estimates for 2023 have been revised 14.5% upward over the past 30 days. In the past three months, HLNE shares have rallied 41.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.