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5 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 wise investment, driven by its solid asset under management (AUM) balance, business diversification initiatives, acquisitions and global reach. Further, its decent liquidity position helps sustain steady capital deployments.
The Zacks Consensus Estimate for T. Rowe Price's 2024 and 2025 earnings has been revised 1.6% and marginally upward over the past 30 days, respectively. This shows that analysts are optimistic regarding the company’s earnings growth prospects. TROW currently carries a Zacks Rank #2 (Buy).
Over the past three months, shares of the company have gained 8.5% compared with the industry's upside of 7.9%.
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. Net revenues saw a four-year (ended 2023) compound annual growth rate (CAGR) of 3.6%.
Going forward, the company’s focus on fortifying its business by enhancing investment capabilities, broadening distribution reach and investing in new product offerings will support revenue growth. We estimate net revenues to see a CAGR of 4.6% over the next three years (ended 2026).
AUM Growth: The company’s AUM balance witnessed a CAGR of 4.6% over the past four years (2019-2023). A strong brand, consistent investment track record and decent business volumes are expected to keep supporting AUM growth in the upcoming period. We forecast AUM to rise 4% and 3.9% in 2024 and 2025, respectively.
Strong Leverage: T. Rowe Price’s debt/equity ratio is 0.00 compared with the industry average of 0.02, 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): TROW’s ROE is 18.41% compared with the industry average of 14.47%. This shows that the company reinvests its cash more efficiently than its peers.
Encouraging Capital Deployment Activities: T. Rowe Price has hiked quarterly dividends every year since its IPO in 1986, the most recent being a sequential hike of 1.6% in January 2024 to $1.24 per share. In 2020, the company’s board of directors increased the common share repurchase authorization by 10 million shares, bringing the total authorization to 22.4 million shares. Given its solid liquidity position and a favorable debt/equity position compared with the industry average, such capital distributions seem sustainable.
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 Affiliated Managers Group (AMG - 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 8.1% in the past three months. Currently, SEIC carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Affiliated Managers has a Zacks Rank #2 at present. Its earnings estimates for 2024 have been revised 1% upward over the past 30 days. In the past three months, AMG shares have rallied 8.1%.
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5 Reasons to Invest in T. Rowe Price (TROW) Stock Right Now
T. Rowe Price Group, Inc. (TROW - Free Report) appears to be a wise investment, driven by its solid asset under management (AUM) balance, business diversification initiatives, acquisitions and global reach. Further, its decent liquidity position helps sustain steady capital deployments.
The Zacks Consensus Estimate for T. Rowe Price's 2024 and 2025 earnings has been revised 1.6% and marginally upward over the past 30 days, respectively. This shows that analysts are optimistic regarding the company’s earnings growth prospects. TROW currently carries a Zacks Rank #2 (Buy).
Over the past three months, shares of the company have gained 8.5% compared with the industry's upside of 7.9%.
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. Net revenues saw a four-year (ended 2023) compound annual growth rate (CAGR) of 3.6%.
Going forward, the company’s focus on fortifying its business by enhancing investment capabilities, broadening distribution reach and investing in new product offerings will support revenue growth. We estimate net revenues to see a CAGR of 4.6% over the next three years (ended 2026).
AUM Growth: The company’s AUM balance witnessed a CAGR of 4.6% over the past four years (2019-2023). A strong brand, consistent investment track record and decent business volumes are expected to keep supporting AUM growth in the upcoming period. We forecast AUM to rise 4% and 3.9% in 2024 and 2025, respectively.
Strong Leverage: T. Rowe Price’s debt/equity ratio is 0.00 compared with the industry average of 0.02, 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): TROW’s ROE is 18.41% compared with the industry average of 14.47%. This shows that the company reinvests its cash more efficiently than its peers.
Encouraging Capital Deployment Activities: T. Rowe Price has hiked quarterly dividends every year since its IPO in 1986, the most recent being a sequential hike of 1.6% in January 2024 to $1.24 per share. In 2020, the company’s board of directors increased the common share repurchase authorization by 10 million shares, bringing the total authorization to 22.4 million shares. Given its solid liquidity position and a favorable debt/equity position compared with the industry average, such capital distributions seem sustainable.
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 Affiliated Managers Group (AMG - 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 8.1% in the past three months. Currently, SEIC carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Affiliated Managers has a Zacks Rank #2 at present. Its earnings estimates for 2024 have been revised 1% upward over the past 30 days. In the past three months, AMG shares have rallied 8.1%.