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T. Rowe Price (TROW) to Post Q4 Earnings: What's in the Cards?
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T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to report fourth-quarter and full-year 2023 results on Feb 8, before the opening bell. TROW’s quarterly revenues are expected to have witnessed an improvement from the year-ago levels, while its earnings are likely to have declined.
In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Its net revenues were supported by a rise in assets under management (AUM). However, a rise in expenses hindered bottom-line growth to some extent.
T. Rowe Price’s earnings outpaced the Zacks Consensus Estimate in each the trailing four quarters, the average surprise being 11.73%.
TROW’s activities in the quarter under review were adequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate for fourth-quarter earnings of $1.60 per share has moved 7.4% north over the past month. However, the figure indicates a decline of 8.1% from a year ago.
The consensus estimate for revenues of $1.62 billion indicates 6.1% growth from the prior-year quarter.
Key Factors & Estimates for Q4
In the October-December quarter, the S&P 500 Index rose 11.2% from September-end levels, indicating favorable equity market performance. Hence, the December-end quarter’s performances of asset managers are expected to have been positively impacted by solid market returns.
However, 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 markets are expected to have affected TROW’s quarterly performance.
Amid the challenging operating environment, T. Rowe Price is likelyto have continued to record net outflows in the fourth quarter. Per the company’s monthly metrics data, it recorded net outflows of $28.3 billion in the quarter under review.
Despite this, the company’s preliminary AUM of $1.45 trillion as of Dec 31, 2023, increased 7.4% from Sep 30, 2023. Although the preliminary AUM balance shows a sequential rise, TROW’s investment management business is likely to have been negatively impacted by market fluctuations and foreign exchange translations. The Zacks Consensus Estimate for investment advisory fee is pegged at $1.44 billion, indicating a decline of 1.6% on a sequential basis. Our estimate for the same is pegged at $1.4 billion.
The consensus estimate for administrative, distribution and servicing fees of $138 million indicates a decline from $141 million in the prior quarter. Our estimate for the metric is pegged at $133.7 million.
Coming to expenses, T. Rowe Price invests substantially to upgrade technology to align with changing customer needs. 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.
Management expects to incur higher seasonal expenditures in the fourth quarter of 2023. The company expects adjusted operating expenses (excluding the carried interest-related compensation) to grow in the range of 2-4% from $4.1 billion in 2022. Our estimate for operating expenses (GAAP basis) is pegged at $1.19 billion.
What the Zacks Model Unveils
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’re reported with our Earnings ESP Filter.
Earnings ESP: T. Rowe Price has an Earnings ESP of +1.33%.
Mr. Cooper Group Inc. (COOP - Free Report) is expected to report fourth-quarter and full-year 2023 results on Feb 9. The company has an Earnings ESP of +4.55% and carries a Zacks Rank #3 at present.
Over the past 30 days, the Zacks Consensus Estimate for COOP’s quarterly earnings has moved 3.1% north to $1.64 per share.
Principal Financial Group, Inc. (PFG - Free Report) is scheduled to release quarterly numbers on Feb 12. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +2.00%.
Estimates for PFG’s quarterly earnings have been revised 1% downward to $1.70 over the past month.
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T. Rowe Price (TROW) to Post Q4 Earnings: What's in the Cards?
T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to report fourth-quarter and full-year 2023 results on Feb 8, before the opening bell. TROW’s quarterly revenues are expected to have witnessed an improvement from the year-ago levels, while its earnings are likely to have declined.
In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Its net revenues were supported by a rise in assets under management (AUM). However, a rise in expenses hindered bottom-line growth to some extent.
T. Rowe Price’s earnings outpaced the Zacks Consensus Estimate in each the trailing four quarters, the average surprise being 11.73%.
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 under review were adequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate for fourth-quarter earnings of $1.60 per share has moved 7.4% north over the past month. However, the figure indicates a decline of 8.1% from a year ago.
The consensus estimate for revenues of $1.62 billion indicates 6.1% growth from the prior-year quarter.
Key Factors & Estimates for Q4
In the October-December quarter, the S&P 500 Index rose 11.2% from September-end levels, indicating favorable equity market performance. Hence, the December-end quarter’s performances of asset managers are expected to have been positively impacted by solid market returns.
However, 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 markets are expected to have affected TROW’s quarterly performance.
Amid the challenging operating environment, T. Rowe Price is likelyto have continued to record net outflows in the fourth quarter. Per the company’s monthly metrics data, it recorded net outflows of $28.3 billion in the quarter under review.
Despite this, the company’s preliminary AUM of $1.45 trillion as of Dec 31, 2023, increased 7.4% from Sep 30, 2023. Although the preliminary AUM balance shows a sequential rise, TROW’s investment management business is likely to have been negatively impacted by market fluctuations and foreign exchange translations. The Zacks Consensus Estimate for investment advisory fee is pegged at $1.44 billion, indicating a decline of 1.6% on a sequential basis. Our estimate for the same is pegged at $1.4 billion.
The consensus estimate for administrative, distribution and servicing fees of $138 million indicates a decline from $141 million in the prior quarter. Our estimate for the metric is pegged at $133.7 million.
Coming to expenses, T. Rowe Price invests substantially to upgrade technology to align with changing customer needs. 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.
Management expects to incur higher seasonal expenditures in the fourth quarter of 2023. The company expects adjusted operating expenses (excluding the carried interest-related compensation) to grow in the range of 2-4% from $4.1 billion in 2022. Our estimate for operating expenses (GAAP basis) is pegged at $1.19 billion.
What the Zacks Model Unveils
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’re reported with our Earnings ESP Filter.
Earnings ESP: T. Rowe Price has an Earnings ESP of +1.33%.
Zacks Rank: T. Rowe Price currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks That Warrant a Look
Mr. Cooper Group Inc. (COOP - Free Report) is expected to report fourth-quarter and full-year 2023 results on Feb 9. The company has an Earnings ESP of +4.55% and carries a Zacks Rank #3 at present.
Over the past 30 days, the Zacks Consensus Estimate for COOP’s quarterly earnings has moved 3.1% north to $1.64 per share.
Principal Financial Group, Inc. (PFG - Free Report) is scheduled to release quarterly numbers on Feb 12. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +2.00%.
Estimates for PFG’s quarterly earnings have been revised 1% downward to $1.70 over the past month.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.