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T. Rowe Riding High on Solid Organic Growth: Time to Buy?

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On Jan 3, we issued an updated research report on T. Rowe Price Group (TROW - Free Report) . The company’s strong balance sheet position and robust organic growth make us optimistic about its future prospects.

Though rising expenses is a major concern, the company’s efforts to improve technology platform and expand distribution channels are likely to bode well in the long run.

Shares of the company have gained 36.8% in a year’s time, outperforming 28.7% growth of the industry it belongs to.

Moreover, the Zacks Consensus Estimate for 2017 earnings has been revised slightly upward over the last 60 days. As a result, it currently carries a Zacks Rank #2 (Buy).

T. Rowe Price remains focused on fortifying its business via several initiatives namely, launching investment strategies and vehicles, enhancing client engagement capabilities in each distribution channel, strengthening distribution channels in the United States, EMEA and Asia Pacific, improving technology platform and deriving long-term cost efficiencies.

Further, organic growth remains a key strength at T. Rowe Price, as reflected by its revenue growth. Net revenues saw a CAGR of 8.7% over the last five years (2012–2016), with the increasing trend continuing in the first nine months of 2017.

The company’s debt free position and strong liquidity keep it well poised to undertake strategic investments and growth opportunities in the future. Also, it enables the company to enhance shareholders’ value through steady capital deployment activities. In February 2017, it hiked its quarterly common stock dividend by 5.6%.

However, rising expenses due to T. Rowe Price’s strategic initiatives to grow might deter bottom-line growth. Also, investment advisory fees, comprising about 88% of its net revenues, remain a concern.  

Other Stocks to Consider

Carolina Financial Corporation’s Zacks Consensus Estimate for earnings for 2017 was revised 1% upward, in the last 60 days. Also, its share price has increased 20.4% in the past 12 months. The stock carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

First Bancorp (FBNC - Free Report) currently carries a Zacks Rank of 2. The stock’s 2017 earnings estimates were revised 3% upward, in the last 60 days. Further, the company’s shares have gained 30.2% in a year’s time.

Hancock Holding Company Zacks Consensus Estimate for earnings for 2017 have remained stable, over the last 60 days. In the past year, its shares have gained 11.9%. Also, it carries a Zacks Rank of 2.

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