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T. Rowe Price (TROW) Q4 Earnings Beat Estimates, AUM Grows
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T. Rowe Price (TROW - Free Report) delivered fourth-quarter 2020 adjusted earnings per share of $2.89, which outpaced the Zacks Consensus Estimate of $2.68. The reported figure also climbed 42.4%, year on year.
Results were driven by higher revenues, backed by an upsurge in investment advisory fees. Also, assets under management (AUM) improved. However, escalating expenses were an undermining factor.
Including certain non-recurring items, net income was $783.4 million or $3.33 per share compared with the $545.3 million or $2.24 per share recorded in the prior-year quarter.
For full-year 2020, the company reported adjusted net income of $2.28 billion or $9.58 per share as against the year-ago income of $1.98 billion or $8.07 per share. The bottom line also beat the Zacks Consensus Estimate of $9.33.
Revenues Improve, Expenses Flare Up
For full-year 2020, net revenues came in at $6.21 billion, up 10.5% year on year. This upside was primarily driven by an increase in investment advisory fees. Moreover, net revenues outpaced the Zacks Consensus Estimate of $6.18 billion.
Net revenues in the fourth quarter increased 18% to $1.73 billion from the year-ago quarter. This upswing primarily resulted from higher investment advisory fees, along with elevated administrative, distribution and servicing fees. The net revenue figure also surpassed the Zacks Consensus Estimate of $1.71 billion.
Investment advisory fees climbed 19.1% year over year to $1.6 billion. Additionally, administrative, distribution and servicing fees jumped 5.4% year over year to $130.7 million.
Investment advisory revenues earned from T. Rowe Price mutual funds distributed in the United States were up 11.9% year over year to $1 billion. Investment advisory revenues earned from other investment portfolios managed by the company increased 33.6% from the prior-year quarter to $601.1 million.
Total adjusted operating expenses flared up 5.2% year on year to $908.5 million in the reported quarter. Including certain one-time items, expenses came in at $977 million, up 10%. Rise in compensation and related costs, along with distribution and servicing, mainly resulted in this uptick.
For 2021, the company revised projected non-GAAP operating expense growth to 8-12% from 6-9% on increased AUM-related expenses.
As of Dec 31, 2020, T. Rowe Price employed 7,678 associates, 4.2% higher than the prior year.
Assets Grow, Liquidity Position Strong
As of Dec 31, 2020, total AUM increased 21.9% year over year to $1.47 trillion. During the December-end quarter, net market appreciation and gains were $160.6 billion, while net cash inflow was $2.2 billion after client transfers.
T. Rowe Price remains debt free with substantial liquidity, including cash and sponsored portfolio investment holdings of $6.2 billion as of Dec 31, 2020, which enable the company to keep on investing.
Capital Deployment Activity
During 2020, T. Rowe Price repurchased 10.9 million shares of its common stock for a total cost of $1.2 billion and at an average cost of $109.3, and invested $214.6 million in capitalized technology and facilities using available cash balances.
During the reported quarter, T. Rowe Price repurchased 145, 247 shares of its common stock for $21.5 million.
For 2021, the company projects capital expenditure of $265 million, comprising more than three-fourth for technology development.
Our Viewpoint
T. Rowe Price put up an impressive show during the October-December period on stellar revenues. The company has the potential to benefit from growth in domestic and global AUM. Though higher operating expenses unfavorably impacted T. Rowe Price and the pandemic-induced economic slowdown is a major concern, the bank’s debt-free position and higher return on earnings, as a whole, make us confident of its robust fundamentals.
T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise
Invesco (IVZ - Free Report) reported fourth-quarter adjusted earnings of 72 cents per share, surpassing the Zacks Consensus Estimate of 57 cents. Also, the bottom line grew 12.5% from the prior-year quarter. Results reflected lower operating expenses and solid liquidity position. Also, AUM balance improved. However, decline in revenues was an undermining factor.
BlackRock, Inc.’s (BLK - Free Report) fourth-quarter adjusted earnings of $10.18 per share surpassed the Zacks Consensus Estimate of $8.84. The figure reflected a rise of 22.1% from the year-ago quarter’s number. Results for the quarter benefited from an improvement in revenues, partly offset by higher expenses. Further, long-term net inflows resulted in a rise in AUM balance, which was a major positive for the company.
Cohen & Steers’ (CNS - Free Report) fourth-quarter adjusted earnings of 76 cents per share surpassed the Zacks Consensus Estimate of 67 cents. Moreover, the bottom line was 2.7% higher than the year-ago reported figure. Results primarily benefited from an improvement in revenues, partially offset by higher expenses. Further, driven by net inflows and market appreciation, the company recorded a rise in AUM balance.
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Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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T. Rowe Price (TROW) Q4 Earnings Beat Estimates, AUM Grows
T. Rowe Price (TROW - Free Report) delivered fourth-quarter 2020 adjusted earnings per share of $2.89, which outpaced the Zacks Consensus Estimate of $2.68. The reported figure also climbed 42.4%, year on year.
Results were driven by higher revenues, backed by an upsurge in investment advisory fees. Also, assets under management (AUM) improved. However, escalating expenses were an undermining factor.
Including certain non-recurring items, net income was $783.4 million or $3.33 per share compared with the $545.3 million or $2.24 per share recorded in the prior-year quarter.
For full-year 2020, the company reported adjusted net income of $2.28 billion or $9.58 per share as against the year-ago income of $1.98 billion or $8.07 per share. The bottom line also beat the Zacks Consensus Estimate of $9.33.
Revenues Improve, Expenses Flare Up
For full-year 2020, net revenues came in at $6.21 billion, up 10.5% year on year. This upside was primarily driven by an increase in investment advisory fees. Moreover, net revenues outpaced the Zacks Consensus Estimate of $6.18 billion.
Net revenues in the fourth quarter increased 18% to $1.73 billion from the year-ago quarter. This upswing primarily resulted from higher investment advisory fees, along with elevated administrative, distribution and servicing fees. The net revenue figure also surpassed the Zacks Consensus Estimate of $1.71 billion.
Investment advisory fees climbed 19.1% year over year to $1.6 billion. Additionally, administrative, distribution and servicing fees jumped 5.4% year over year to $130.7 million.
Investment advisory revenues earned from T. Rowe Price mutual funds distributed in the United States were up 11.9% year over year to $1 billion. Investment advisory revenues earned from other investment portfolios managed by the company increased 33.6% from the prior-year quarter to $601.1 million.
Total adjusted operating expenses flared up 5.2% year on year to $908.5 million in the reported quarter. Including certain one-time items, expenses came in at $977 million, up 10%. Rise in compensation and related costs, along with distribution and servicing, mainly resulted in this uptick.
For 2021, the company revised projected non-GAAP operating expense growth to 8-12% from 6-9% on increased AUM-related expenses.
As of Dec 31, 2020, T. Rowe Price employed 7,678 associates, 4.2% higher than the prior year.
Assets Grow, Liquidity Position Strong
As of Dec 31, 2020, total AUM increased 21.9% year over year to $1.47 trillion. During the December-end quarter, net market appreciation and gains were $160.6 billion, while net cash inflow was $2.2 billion after client transfers.
T. Rowe Price remains debt free with substantial liquidity, including cash and sponsored portfolio investment holdings of $6.2 billion as of Dec 31, 2020, which enable the company to keep on investing.
Capital Deployment Activity
During 2020, T. Rowe Price repurchased 10.9 million shares of its common stock for a total cost of $1.2 billion and at an average cost of $109.3, and invested $214.6 million in capitalized technology and facilities using available cash balances.
During the reported quarter, T. Rowe Price repurchased 145, 247 shares of its common stock for $21.5 million.
For 2021, the company projects capital expenditure of $265 million, comprising more than three-fourth for technology development.
Our Viewpoint
T. Rowe Price put up an impressive show during the October-December period on stellar revenues. The company has the potential to benefit from growth in domestic and global AUM. Though higher operating expenses unfavorably impacted T. Rowe Price and the pandemic-induced economic slowdown is a major concern, the bank’s debt-free position and higher return on earnings, as a whole, make us confident of its robust fundamentals.
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, the company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Investment Managers
Invesco (IVZ - Free Report) reported fourth-quarter adjusted earnings of 72 cents per share, surpassing the Zacks Consensus Estimate of 57 cents. Also, the bottom line grew 12.5% from the prior-year quarter. Results reflected lower operating expenses and solid liquidity position. Also, AUM balance improved. However, decline in revenues was an undermining factor.
BlackRock, Inc.’s (BLK - Free Report) fourth-quarter adjusted earnings of $10.18 per share surpassed the Zacks Consensus Estimate of $8.84. The figure reflected a rise of 22.1% from the year-ago quarter’s number. Results for the quarter benefited from an improvement in revenues, partly offset by higher expenses. Further, long-term net inflows resulted in a rise in AUM balance, which was a major positive for the company.
Cohen & Steers’ (CNS - Free Report) fourth-quarter adjusted earnings of 76 cents per share surpassed the Zacks Consensus Estimate of 67 cents. Moreover, the bottom line was 2.7% higher than the year-ago reported figure. Results primarily benefited from an improvement in revenues, partially offset by higher expenses. Further, driven by net inflows and market appreciation, the company recorded a rise in AUM balance.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>