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T. Rowe Price (TROW) Q3 Earnings: What's in the Cards?
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T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to report third-quarter 2016 results on Oct 27.
The Baltimore, MD-based asset manager’s s second-quarter 2016 net income per share of $1.15 beat the Zacks Consensus Estimate by nearly 2%. Increase in assets under management (AUM) was a positive factor, while decline in revenues and elevated operating expenses were the negatives.
Interestingly, T. Rowe Price has delivered positive earnings surprises in three of the trailing four quarters, with an average earnings beat of 3.5%.
Will T. Rowe Price post an earnings beat this quarter as well? Notably, our quantitative model doesn’t call for an earnings beat this time. Here is why:
T. Rowe Price doesn’t have the right combination of the two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or at least 3 (Hold) – that increases the odds of an earnings beat.
Zacks ESP: The Earnings ESP for T. Rowe Price is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at $1.20. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: T. Rowe Price’s Zacks Rank #2 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of a positive earnings surprise.
Factors to Influence Q3 Results
According to Morningstar data, T. Rowe Price witnessed around $500 million of net outflows in U.S. mutual fund products in third-quarter 2016.
However, the company should record increase in AUM as the third quarter experienced strong performance of equity markets. Notably, S&P 500 Index gained 3.3% in the quarter, which is likely to benefit T. Rowe Price, given its equity-heavy asset mix.
The current low interest-rate environment, however, continues to impact the company’s fee income growth. Notably, in order to maintain a positive yield for fund investors, the company continues to waive fees in its money market mutual funds and trusts, with the same trend expected to reflect in the third-quarter results.
During last quarter’s earnings call, management had highlighted that it remains focused on fortifying business through several planned initiatives, including investment in digital and mobile capabilities, advisory services and sales team, launching new products and offering new vehicles for existing strategies. Moreover, the company incurs significant expenditures to attract new investment advisory clients and additional investments from existing clients. Given such backdrop, the upcoming release should exhibit higher expenses.
The activities of T. Rowe Price during the quarter have been able to win analysts’ confidence as reflected by the seven upward revisions in earnings estimates (versus no downward revision) over the last 30 days. The Zacks Consensus Estimate has been revised 3.4% upward over the last one month to $1.20.
Stocks that Warrant a Look
Here are some stocks worth considering, as they have the right combination of elements to post an earnings beat this quarter.
Franklin Resources, Inc. (BEN - Free Report) is slated to release results on Oct 26. The company has an Earnings ESP of +1.45 % and a Zacks Rank #3.
Lazard Ltd. (LAZ - Free Report) , another Zacks Rank #2 stock, has an Earnings ESP of +3.90%. It is scheduled to report results on Oct 27.
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T. Rowe Price (TROW) Q3 Earnings: What's in the Cards?
T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to report third-quarter 2016 results on Oct 27.
The Baltimore, MD-based asset manager’s s second-quarter 2016 net income per share of $1.15 beat the Zacks Consensus Estimate by nearly 2%. Increase in assets under management (AUM) was a positive factor, while decline in revenues and elevated operating expenses were the negatives.
Interestingly, T. Rowe Price has delivered positive earnings surprises in three of the trailing four quarters, with an average earnings beat of 3.5%.
T ROWE PRICE Price and EPS Surprise
T ROWE PRICE Price and EPS Surprise | T ROWE PRICE Quote
Will T. Rowe Price post an earnings beat this quarter as well? Notably, our quantitative model doesn’t call for an earnings beat this time. Here is why:
T. Rowe Price doesn’t have the right combination of the two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or at least 3 (Hold) – that increases the odds of an earnings beat.
Zacks ESP: The Earnings ESP for T. Rowe Price is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at $1.20. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: T. Rowe Price’s Zacks Rank #2 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of a positive earnings surprise.
Factors to Influence Q3 Results
According to Morningstar data, T. Rowe Price witnessed around $500 million of net outflows in U.S. mutual fund products in third-quarter 2016.
However, the company should record increase in AUM as the third quarter experienced strong performance of equity markets. Notably, S&P 500 Index gained 3.3% in the quarter, which is likely to benefit T. Rowe Price, given its equity-heavy asset mix.
The current low interest-rate environment, however, continues to impact the company’s fee income growth. Notably, in order to maintain a positive yield for fund investors, the company continues to waive fees in its money market mutual funds and trusts, with the same trend expected to reflect in the third-quarter results.
During last quarter’s earnings call, management had highlighted that it remains focused on fortifying business through several planned initiatives, including investment in digital and mobile capabilities, advisory services and sales team, launching new products and offering new vehicles for existing strategies. Moreover, the company incurs significant expenditures to attract new investment advisory clients and additional investments from existing clients. Given such backdrop, the upcoming release should exhibit higher expenses.
The activities of T. Rowe Price during the quarter have been able to win analysts’ confidence as reflected by the seven upward revisions in earnings estimates (versus no downward revision) over the last 30 days. The Zacks Consensus Estimate has been revised 3.4% upward over the last one month to $1.20.
Stocks that Warrant a Look
Here are some stocks worth considering, as they have the right combination of elements to post an earnings beat this quarter.
Franklin Resources, Inc. (BEN - Free Report) is slated to release results on Oct 26. The company has an Earnings ESP of +1.45 % and a Zacks Rank #3.
Raymond James Financial, Inc. (RJF - Free Report) has an Earnings ESP of +2.04% and it carries a Zacks Rank #2. The company is slated to release results on Oct 26. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lazard Ltd. (LAZ - Free Report) , another Zacks Rank #2 stock, has an Earnings ESP of +3.90%. It is scheduled to report results on Oct 27.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>