Given its focus on fortifying business through several planned initiatives such as launching investment strategies and vehicles, enhancing client engagement capabilities in each distribution channel, strengthening distribution channels in the United States., EMEA, and Asia Pacific and improving its technology platform, T. Rowe Price Group, Inc. (TROW - Free Report) appears to be a solid bet. The company’s mix shift toward international growth funds and debt-free position are anticipated to drive the stock.
Though T. Rowe Price’s expenses might escalate due to potential investments in technology and several planned strategic initiatives, sharper focus on organic growth is anticipated to make the growth path smoother for the company.
T. Rowe Price has been witnessing upward estimate revisions, reflecting analysts’ optimism about its future prospects. Over the past 60 days, the Zacks Consensus Estimate for 2018 and has 2019 inched up slightly.
Further, this Zacks Rank #2 (Buy) stock has gained 5.3% in the past six months against 15.6% decline recorded by the industry.
There are also a number of other aspects which make the stock an attractive investment option.
5 Reasons Why T. Rowe Price is a Golden Egg
Revenue Growth: Organic growth remains a key strength at T. Rowe Price, as reflected in its revenue growth story. Net revenues demonstrated 8.3% CAGR over the last five years (2013-2017), with the rising trend continuing in the first quarter of 2018 as well.
The company’s projected sales growth (F1/F0) of 12.26% (as against the 0.52% industry average) indicates constant upward momentum in revenues.
Earnings Per Share Strength: T. Rowe Price witnessed earnings growth of 7.7% over the last three-five years. In addition, the company’s long-term (three-five years) estimated EPS growth rate of 11.14% promises rewards for investors in the long run. Further, earnings are anticipated to display an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 32.6% compared with the industry average rate of 9.7%.
Steady Capital Deployment: In February 2018, the company raised its quarterly common stock dividend by 23%. This marked T. Rowe Price’s 32nd consecutive annual dividend increase and reflected its commitment to return value to shareholders with its strong cash-generation capabilities. In December 2015, T. Rowe Price’s board of directors approved an increase in the company’s share repurchase authorization by 12 million. This approval enhances the total repurchase authorization to 20.9 million shares.
Strong Leverage: T. Rowe Price’s debt/equity ratio is 0.00 compared with the industry average of 0.26, 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 of 26.93%, compared with the industry average of 12.93%, indicates the company’s commendable position over its peers.
Other Stocks to Consider
Some other top-ranked stocks in the same space are Prospect Capital Corporation (PSEC - Free Report) , SEI Investments Company (SEIC - Free Report) and Great Elm Capital Corporation (GECC - Free Report) . All three carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Prospect Capital’s earnings estimates have been revised 2.7% upward for 2018 in the past 60 days. Also, its share price has surged 1.8% in the past three months.
SEI Investments’ earnings estimates for 2018 have been revised slightly upward over the last seven days. Further, in a year’s time, the company’s shares have jumped 18.3%.
Great Elm Capital has witnessed a 9.4% upward earnings estimates revision for the current year over the last 60 days. Moreover, in the past three months, its shares have gained slightly.
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