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Rise in AUM Balance to Support T. Rowe Price This Earnings Season

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T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to report third-quarter 2024 results on Nov. 1, before the opening bell. The company’s quarterly revenues and earnings are expected to have witnessed improvements from the year-ago reported levels.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

In the last reported quarter, TROW’s earnings surpassed the Zacks Consensus Estimate. A rise in its assets under management (AUM) supported net revenues. 

T. Rowe Price’s earnings outpaced the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 12.41%.

T. Rowe Price Group, Inc. Price and EPS Surprise

 

Key Factors & Estimates for TROW in Q3

In the July-September quarter, the S&P 500 Index rose more than 5%, indicating favorable markets performance. The fixed-income markets reflected positive flow trends. The equity markets could not catch up with the fixed-income markets. Hence, the performances of asset managers in the September-end quarter are expected to have been driven by decent fixed-income markets returns. However, weak equity markets are anticipated to have offset growth to some extent.

Amid the challenging operating environment, T. Rowe Price is likely to have continued to record net outflows in the third quarter. Per the company’s monthly metrics data, its net outflows were $12.2 billion for the quarter ended Sept. 30, 2024.

Despite this, the company’s preliminary AUM of $1.63 trillion as of Sept. 30, 2024, increased 3.9% from June 30, 2024, driven by an improvement in fixed income, multi-asset and alternative products. 

The Zacks Consensus Estimate for total AUM is pegged at $1.63 trillion, indicating a 3.7% sequential increase. Our estimate for the same is pegged at $1.62 billion.

The Zacks Consensus Estimate for investment advisory fees is pegged at $1.64 billion, indicating a rise of 3.3% on a sequential basis. Our estimate for the same is pegged at $1.61 billion.

The consensus estimate for administrative, distribution and servicing fees of $156 million indicates a 5.7% increase from the prior quarter’s actual. Our estimate for the metric is pegged at $153.2 million.

Coming to expenses, T. Rowe Price incurs significant expenditure to attract investment advisory clients and additional investments from existing clients. Also, the company invests substantially in upgrading technology to align with changing customer needs. 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 pegged at $1.23 billion, indicating a 5.1% rise on a sequential basis.

What the Zacks Model Unveils for TROW

According to our proven model, the 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 elements, a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of +0.93%.

Zacks Rank: T. Rowe Price currently has a Zacks Rank of 2.

TROW’s activities in the quarter under review were adequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate for third-quarter earnings of $2.36 per share has moved marginally upward over the past seven days. Also, the figure indicates a year-over-year increase of 8.8%.

The consensus estimate for revenues of $1.84 billion implies 9.9% growth from the prior-year quarter’s actual.

TROW Peers Worth a Look

Here are some other finance stocks that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat this time around.

Hamilton Lane Incorporated (HLNE - Free Report) is scheduled to release first-quarter fiscal 2025 earnings on Nov. 6. The company, which flaunts a Zacks Rank #1 at present, has an Earnings ESP of +0.63%. You can see the complete list of today’s Zacks #1 Rank stocks here.

HLNE’s quarterly earnings estimates have been unchanged at $1.06 over the past week.

Blue Owl Capital (OWL - Free Report) has an Earnings ESP of +0.18% and a Zacks Rank #3 at present. The company is scheduled to release third-quarter 2024 results on Oct. 31.

OWL’s quarterly earnings estimates have been unchanged at 20 cents over the past week.


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