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What's in Store for T. Rowe Price (TROW) in Q3 Earnings?
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T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to report third-quarter 2022 results before the opening bell on Oct 27. TROW’s earnings and revenues are projected to decline from the year-ago reported figures.
In the last reported quarter, T. Rowe Price’s earnings missed the Zacks Consensus Estimate on lower assets under management (AUM) and net revenues, as well as rising expenses.
T. Rowe Price’s earnings outpaced estimates in one of the trailing four quarters and missed the mark in the other three, the average negative surprise being 5.78%.
TROW’s activities in the quarter were inadequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate of $1.83 for third-quarter earnings has moved 6.6% south over the past week. Moreover, it indicates a decline of 44% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate of $1.54 billion for revenues suggests a 21% decline from the prior-year quarter’s reported number.
Key Factors to Note
In the third quarter, the S&P 500 Index declined 5% sequentially, indicating unfavorable equity markets. Fixed-income markets too saw notable negative performances, with the Barclays U.S. Aggregate Bond Index recording a decline of 4% in the quarter.
Hence, the third-quarter performances of asset managers are expected to have been affected by transitory challenges in the industry like declining markets, the shift away from growth, and uninspiring performances in certain U.S. equity strategies. Also, the swift decline in global markets, which depressed net flows across the industry in the first half of 2022, is expected to have continued in the third quarter as well.
TROW too has not been immune to these challenges, as evident in its net flows, which have turned negative this year.
Moreover, secular trends like market share tilt from active to passive; open-ended mutual funds to exchange traded funds, collective investment trusts, and SMAs; and public markets to private are expected to have affected the company’s quarterly performance.
Amid the challenging developments, T. Rowe Price is likely to have continued recording net outflows in the third quarter of 2022. The preliminary AUM of $1.23 trillion as of Sep 30, 2022, indicates a decline of 6.1% from $1.31 trillion as of Jun 30, 2022.
Such a decline in AUM, owing to market fluctuations and foreign exchange translations, is expected to have affected TROW’s investment management business. The consensus estimate for investment advisory fees of $1.41 billion indicates a fall of 5.8% from the previous quarter’s reported figure.
The unfavorable mix of AUM is expected to have reduced average fees in the quarter.
Also, the consensus estimate for administrative, distribution and servicing fees of $138 million indicates a fall of 3.5% from the previous quarter’s reported figure.
Coming to expenses,T. Rowe Price is expected to have incurred higher employee expenses due to rising salaries on account of inflation. The company’s initiatives to attract investment advisory clients and additional investments from its existing clients are expected to have led to significant expenditure. Thus, overall expenses are expected to have risen in the quarter under review, impeding bottom-line growth.
Earnings Whispers
The proven Zacks model does not conclusively predict an earnings beat for T. Rowe Price this time around. This is because T. Rowe Price does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: T. Rowe Price has an Earnings ESP of 0.00%.
Zacks Rank: T. Rowe Price currently carries a Zacks Rank of 5 (Strong Sell).
Stocks to Consider
A couple of finance stocks, which you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases per our model, are Ameriprise Financial, Inc. (AMP - Free Report) and Ares Management (ARES - Free Report) .
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What's in Store for T. Rowe Price (TROW) in Q3 Earnings?
T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to report third-quarter 2022 results before the opening bell on Oct 27. TROW’s earnings and revenues are projected to decline from the year-ago reported figures.
In the last reported quarter, T. Rowe Price’s earnings missed the Zacks Consensus Estimate on lower assets under management (AUM) and net revenues, as well as rising expenses.
T. Rowe Price’s earnings outpaced estimates in one of the trailing four quarters and missed the mark in the other three, the average negative surprise being 5.78%.
T. Rowe Price Group, Inc. Price and EPS Surprise
T. Rowe Price Group, Inc. price-eps-surprise | T. Rowe Price Group, Inc. Quote
TROW’s activities in the quarter were inadequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate of $1.83 for third-quarter earnings has moved 6.6% south over the past week. Moreover, it indicates a decline of 44% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate of $1.54 billion for revenues suggests a 21% decline from the prior-year quarter’s reported number.
Key Factors to Note
In the third quarter, the S&P 500 Index declined 5% sequentially, indicating unfavorable equity markets. Fixed-income markets too saw notable negative performances, with the Barclays U.S. Aggregate Bond Index recording a decline of 4% in the quarter.
Hence, the third-quarter performances of asset managers are expected to have been affected by transitory challenges in the industry like declining markets, the shift away from growth, and uninspiring performances in certain U.S. equity strategies. Also, the swift decline in global markets, which depressed net flows across the industry in the first half of 2022, is expected to have continued in the third quarter as well.
TROW too has not been immune to these challenges, as evident in its net flows, which have turned negative this year.
Moreover, secular trends like market share tilt from active to passive; open-ended mutual funds to exchange traded funds, collective investment trusts, and SMAs; and public markets to private are expected to have affected the company’s quarterly performance.
Amid the challenging developments, T. Rowe Price is likely to have continued recording net outflows in the third quarter of 2022. The preliminary AUM of $1.23 trillion as of Sep 30, 2022, indicates a decline of 6.1% from $1.31 trillion as of Jun 30, 2022.
Such a decline in AUM, owing to market fluctuations and foreign exchange translations, is expected to have affected TROW’s investment management business. The consensus estimate for investment advisory fees of $1.41 billion indicates a fall of 5.8% from the previous quarter’s reported figure.
The unfavorable mix of AUM is expected to have reduced average fees in the quarter.
Also, the consensus estimate for administrative, distribution and servicing fees of $138 million indicates a fall of 3.5% from the previous quarter’s reported figure.
Coming to expenses,T. Rowe Price is expected to have incurred higher employee expenses due to rising salaries on account of inflation. The company’s initiatives to attract investment advisory clients and additional investments from its existing clients are expected to have led to significant expenditure. Thus, overall expenses are expected to have risen in the quarter under review, impeding bottom-line growth.
Earnings Whispers
The proven Zacks model does not conclusively predict an earnings beat for T. Rowe Price this time around. This is because T. Rowe Price does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: T. Rowe Price has an Earnings ESP of 0.00%.
Zacks Rank: T. Rowe Price currently carries a Zacks Rank of 5 (Strong Sell).
Stocks to Consider
A couple of finance stocks, which you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases per our model, are Ameriprise Financial, Inc. (AMP - Free Report) and Ares Management (ARES - Free Report) .
The Earnings ESP for Ameriprise Financial is +0.42%. AMP carries a Zacks Rank #3 at present. The company is slated to report results on Oct 25. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ares Management is scheduled to release quarterly results on Oct 27. ARES currently has a Zacks Rank #3 and an Earnings ESP of +5.04%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.