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T. Rowe Price Group, Inc. (TROW - Free Report) has reported fourth-quarter 2023 adjusted earnings per share of $1.72, which outpaced the Zacks Consensus Estimate of $1.60. However, the bottom line decreased 1.1% year over year.
TROW's net revenues were supported by a rise in assets under management (AUM). A decline in expenses aided bottom-line growth. Further, appreciation in cash and cash equivalents will help the company to continue investing.
Net income attributable to T. Rowe Price was $437.6 million, up 64.5% year over year.
In 2023, adjusted earnings of $7.59 per share beat the consensus estimate of $7.47 but declined 5.4% year over year. Net income attributable to T. Rowe Price was $1.79 billion, jumping 14.8%.
Revenues Increase, Expenses Decline
Net revenues in the fourth quarter increased 7.7% year over year to $1.64 billion. The top line surpassed the Zacks Consensus Estimate of $1.62 billion.
In 2023, net revenues were $6.46 billion, down marginally year over year. The top line met the consensus estimate.
Also, investment advisory fees increased 6.8% year over year to $1.46 billion. Capital allocation-based income jumped 51.7% to $40.2 million. We projected investment advisory fees and capital allocation-based income of $1.40 billion and $36 million, respectively.
Total operating expenses decreased 1.3% to $1.25 billion in the reported quarter. Our estimate for the metric was $1.19 billion.
As of Dec 31, 2023, T. Rowe Price employed 7,906 associates, up 1% year over year.
AUM Rises, Liquidity Position Strong
As of Dec 31, 2023, total AUM grew 7% year over year to $1.37 trillion. Our projection was pegged at $1.33 billion.
In the fourth quarter, net market appreciation and gains of $126.3 billion positively impacted TROW’s AUM. However, net cash outflows were $28.3 billion.
The company had substantial liquidity, including cash and cash equivalents of $2.07 billion as of Dec 31, 2023, up from $1.76 billion as of Dec 31, 2022. This will enable TROW to keep investing.
Our View
T. Rowe Price’s diversified business model, focus on enhancing investment capabilities, broadening distribution reach and improving client partnerships will aid long-term growth. An escalation in AUM during the fourth quarter also acted as a positive. However, growing dependence on investment advisory fees is concerning, as market fluctuations and a sudden slowdown in overall business activities may hurt this revenue source.
T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise
BlackRock, Inc.’s (BLK - Free Report) fourth-quarter 2023 adjusted earnings of $9.66 per share handily surpassed the Zacks Consensus Estimate of $8.84. The figure reflects a year-over-year increase of 8.2%.
BLK’s quarterly results benefited from a rise in revenues and higher non-operating income. Further, the AUM balance witnessed an improvement, owing to net inflows. However, higher expenses acted as dampeners.
Invesco’s (IVZ - Free Report) fourth-quarter 2023 adjusted earnings of 47 cents per share handily surpassed the Zacks Consensus Estimate of 38 cents. The bottom line grew 20.5% year over year.
Results of IVZ benefited from an increase in the AUM balance on decent inflows. However, a rise in operating expenses and lower revenues were the undermining factors.
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T. Rowe Price (TROW) Q4 Earnings Beat Estimates, AUM Rises Y/Y
T. Rowe Price Group, Inc. (TROW - Free Report) has reported fourth-quarter 2023 adjusted earnings per share of $1.72, which outpaced the Zacks Consensus Estimate of $1.60. However, the bottom line decreased 1.1% year over year.
TROW's net revenues were supported by a rise in assets under management (AUM). A decline in expenses aided bottom-line growth. Further, appreciation in cash and cash equivalents will help the company to continue investing.
Net income attributable to T. Rowe Price was $437.6 million, up 64.5% year over year.
In 2023, adjusted earnings of $7.59 per share beat the consensus estimate of $7.47 but declined 5.4% year over year. Net income attributable to T. Rowe Price was $1.79 billion, jumping 14.8%.
Revenues Increase, Expenses Decline
Net revenues in the fourth quarter increased 7.7% year over year to $1.64 billion. The top line surpassed the Zacks Consensus Estimate of $1.62 billion.
In 2023, net revenues were $6.46 billion, down marginally year over year. The top line met the consensus estimate.
Also, investment advisory fees increased 6.8% year over year to $1.46 billion. Capital allocation-based income jumped 51.7% to $40.2 million. We projected investment advisory fees and capital allocation-based income of $1.40 billion and $36 million, respectively.
Total operating expenses decreased 1.3% to $1.25 billion in the reported quarter. Our estimate for the metric was $1.19 billion.
As of Dec 31, 2023, T. Rowe Price employed 7,906 associates, up 1% year over year.
AUM Rises, Liquidity Position Strong
As of Dec 31, 2023, total AUM grew 7% year over year to $1.37 trillion. Our projection was pegged at $1.33 billion.
In the fourth quarter, net market appreciation and gains of $126.3 billion positively impacted TROW’s AUM. However, net cash outflows were $28.3 billion.
The company had substantial liquidity, including cash and cash equivalents of $2.07 billion as of Dec 31, 2023, up from $1.76 billion as of Dec 31, 2022. This will enable TROW to keep investing.
Our View
T. Rowe Price’s diversified business model, focus on enhancing investment capabilities, broadening distribution reach and improving client partnerships will aid long-term growth. An escalation in AUM during the fourth quarter also acted as a positive. However, growing dependence on investment advisory fees is concerning, as market fluctuations and a sudden slowdown in overall business activities may hurt this revenue source.
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, TROW 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) fourth-quarter 2023 adjusted earnings of $9.66 per share handily surpassed the Zacks Consensus Estimate of $8.84. The figure reflects a year-over-year increase of 8.2%.
BLK’s quarterly results benefited from a rise in revenues and higher non-operating income. Further, the AUM balance witnessed an improvement, owing to net inflows. However, higher expenses acted as dampeners.
Invesco’s (IVZ - Free Report) fourth-quarter 2023 adjusted earnings of 47 cents per share handily surpassed the Zacks Consensus Estimate of 38 cents. The bottom line grew 20.5% year over year.
Results of IVZ benefited from an increase in the AUM balance on decent inflows. However, a rise in operating expenses and lower revenues were the undermining factors.