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Decent Equity Market to Aid T. Rowe Price (TROW) in Q2 Earnings

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T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to report second-quarter 2024 results on Jul 26, before the opening bell. TROW’s quarterly revenues and earnings are expected to have witnessed improvements from the year-ago reported levels.

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). 

T. Rowe Price’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.84%.

TROW’s activities in the quarter under review were adequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate for second-quarter earnings of $2.25 per share has moved marginally upward over the past seven days. Also, the figure indicates a year-over-year increase of 11.39%.

The consensus estimate for revenues of $1.78 billion implies 10.48% growth from the prior-year quarter’s actual.

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

T. Rowe Price Group, Inc. price-eps-surprise | T. Rowe Price Group, Inc. Quote

Key Factors & Estimates for Q2

Last year’s stock market rally continued in the April-June quarter, with the S&P 500 Index rising more than 4%, indicating a favorable equity-market performance. However, the fixed-income could not catch up with the equity market trend. The Bloomberg U.S. Aggregate Bond Index remained flat from the prior quarter. Hence, the June-end quarter’s performances of asset managers are expected to have been positively impacted by favorable equity market returns, offset by a weak fixed-income market.

Amid the challenging operating environment, T. Rowe Price is likely to have continued to record net outflows in the second quarter. Per the company’s monthly metrics data, its net outflows were $3.7 billion in the quarter under review.

The company’s preliminary AUM of $1.57 trillion as of Jun 30, 2024, increased 1.8% from Mar 31, 2023, driven by an improvement in equity products, fixed income, multi-asset and alternative products. 

The Zacks Consensus Estimate for total AUM is pegged at $1.54 billion, indicating a 3.8% increase on a sequential basis. Our estimate for the same is pegged at $1.56 billion.

The Zacks Consensus Estimate for investment advisory fees is pegged at $1.58 billion, indicating a rise of 1.8% on a sequential basis. Our estimate for the same is pegged at $1.54 billion.

The consensus estimate for administrative, distribution and servicing fees of $158.7 million indicates a 6.4% increase from the prior quarter’s actual. Our estimate for the metric is pegged at $170 million.

Coming to expenses, T. Rowe Price incurs significant expenditure to attract new investment advisory clients and additional investments from existing clients. Also, the company invests substantially to upgrade 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 14.2% year-over-year increase.

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 are reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of +0.39%.

Zacks Rank: T. Rowe Price currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Finance Stocks Worth a Look

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

The Earnings ESP for Artisan Partners Asset Management Inc. (APAM - Free Report) is +1.73% and it carries a Zacks Rank #2 at present. The company is slated to report second-quarter 2024 results on Jul 23.

Over the past 30 days, the Zacks Consensus Estimate for APAM’s quarterly earnings has moved 1.2% north to 87 cents per share.

Hamilton Lane Incorporated (HLNE - Free Report) has an Earnings ESP of +2.50% and sports a Zacks Rank #1 at present. The company is scheduled to release first-quarter fiscal 2025 results on Aug 6.

HLNE’s quarterly earnings estimates have been revised nearly 1% upward to $1.09 over the past month.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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