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T. Rowe Price's (TROW) Q1 Earnings Lag, Revenues Up Y/Y
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T. Rowe Price Group, Inc. (TROW - Free Report) reported negative earnings surprise of 1.7% for first-quarter 2017. Adjusted earnings per share of $1.18 missed the Zacks Consensus Estimate of $1.20. However, the bottom line improved 16.8% from the year-ago figure of $1.01.
Lower-than-expected results highlighted elevated operating expenses. However, top-line growth and higher assets under management (AUM) remained positives.
Including certain non-recurring items, net income came in at $385.9 million or $1.54 per share compared with $304.1 million or $1.18 per share recorded in the prior-year quarter.
Revenue Growth Displayed, Expenses Flare Up
Net revenue rose 12% to $1.11 billion from the year-ago quarter. The rise was primarily stemmed by higher investment advisory fees that grew 13.8% year over year to $991.1 million. Moreover, net revenue surpassed the Zacks Consensus Estimate of $1.10 billion.
Distribution and servicing fees rose 3.8% to $35.2 million. However, administrative fees declined 2.3% to $87.3 million on a year-over-year basis.
Investment advisory revenues earned from the T. Rowe Price mutual funds, distributed in the U.S., were up 13.2% year over year to $715.8 million. Investment advisory revenues earned from other investment portfolios, managed by the company, rose 15.3% from the prior-year quarter to $275.3 million.
Total adjusted operating expenses were up 10.0% year over year to $640.1 million in the quarter. Including certain one-time items, net of insurance recovery, associated with the Dell appraisal rights matter, expenses were $591.9 million, up 1.5%.
As of Mar 31, 2017, T. Rowe Price employed 6,474 associates, 5.5% higher than last year.
Strong Assets Position
As of Mar 31, 2017, total AUM climbed 12.7% year over year to $861.6 billion. During the quarter, net market appreciation and income, came in at $50.1 billion, while net cash inflow was $0.7 billion after client transfers.
T. Rowe Price remains debt free with substantial liquidity, including cash and sponsored portfolio investment holdings of about $2.2 billion as of Mar 31, 2017, which assist the company to keep on investing.
Capital Deployment Activity
During first-quarter 2017, T. Rowe Price repurchased 4.6 million shares of its common stock for $316.3 million, and invested $46.9 million in capitalized technology and facilities using available cash balances.
For 2017, the company projects capital expenditures to be approximately $200 million, comprising two-third for technology development.
Our Viewpoint
T. Rowe Price’s financial stability has the potential to benefit from growth opportunities in the domestic and global AUM. The company’s debt-free position, higher return on earnings and improvement in investor sentiment, as a whole, makes us confident of its robust fundamentals, going ahead. Furthermore, a relatively better mutual fund performance is a positive.
However, higher operating expenses and stringent regulatory norms remain concerns.
T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise
Among other investment managers, Legg Mason, Inc. , Lazard Ltd. (LAZ - Free Report) and Franklin Resources, Inc. (BEN - Free Report) are scheduled to report March quarter-end results on Apr 26, Apr 27 and Apr 28, respectively.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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T. Rowe Price's (TROW) Q1 Earnings Lag, Revenues Up Y/Y
T. Rowe Price Group, Inc. (TROW - Free Report) reported negative earnings surprise of 1.7% for first-quarter 2017. Adjusted earnings per share of $1.18 missed the Zacks Consensus Estimate of $1.20. However, the bottom line improved 16.8% from the year-ago figure of $1.01.
Lower-than-expected results highlighted elevated operating expenses. However, top-line growth and higher assets under management (AUM) remained positives.
Including certain non-recurring items, net income came in at $385.9 million or $1.54 per share compared with $304.1 million or $1.18 per share recorded in the prior-year quarter.
Revenue Growth Displayed, Expenses Flare Up
Net revenue rose 12% to $1.11 billion from the year-ago quarter. The rise was primarily stemmed by higher investment advisory fees that grew 13.8% year over year to $991.1 million. Moreover, net revenue surpassed the Zacks Consensus Estimate of $1.10 billion.
Distribution and servicing fees rose 3.8% to $35.2 million. However, administrative fees declined 2.3% to $87.3 million on a year-over-year basis.
Investment advisory revenues earned from the T. Rowe Price mutual funds, distributed in the U.S., were up 13.2% year over year to $715.8 million. Investment advisory revenues earned from other investment portfolios, managed by the company, rose 15.3% from the prior-year quarter to $275.3 million.
Total adjusted operating expenses were up 10.0% year over year to $640.1 million in the quarter. Including certain one-time items, net of insurance recovery, associated with the Dell appraisal rights matter, expenses were $591.9 million, up 1.5%.
As of Mar 31, 2017, T. Rowe Price employed 6,474 associates, 5.5% higher than last year.
Strong Assets Position
As of Mar 31, 2017, total AUM climbed 12.7% year over year to $861.6 billion. During the quarter, net market appreciation and income, came in at $50.1 billion, while net cash inflow was $0.7 billion after client transfers.
T. Rowe Price remains debt free with substantial liquidity, including cash and sponsored portfolio investment holdings of about $2.2 billion as of Mar 31, 2017, which assist the company to keep on investing.
Capital Deployment Activity
During first-quarter 2017, T. Rowe Price repurchased 4.6 million shares of its common stock for $316.3 million, and invested $46.9 million in capitalized technology and facilities using available cash balances.
For 2017, the company projects capital expenditures to be approximately $200 million, comprising two-third for technology development.
Our Viewpoint
T. Rowe Price’s financial stability has the potential to benefit from growth opportunities in the domestic and global AUM. The company’s debt-free position, higher return on earnings and improvement in investor sentiment, as a whole, makes us confident of its robust fundamentals, going ahead. Furthermore, a relatively better mutual fund performance is a positive.
However, higher operating expenses and stringent regulatory norms remain concerns.
T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise
T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise | T. Rowe Price Group, Inc. Quote
Currently, T. Rowe Price carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other investment managers, Legg Mason, Inc. , Lazard Ltd. (LAZ - Free Report) and Franklin Resources, Inc. (BEN - Free Report) are scheduled to report March quarter-end results on Apr 26, Apr 27 and Apr 28, respectively.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>