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T. Rowe Price (TROW) Gains 23.9% QTD: Will the Rally Continue?
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Shares of T. Rowe Price (TROW - Free Report) have rallied 23.9%, quarter to date, compared with the industry’s rally of 27.5%. This marks a significant turnaround from the dismal first-quarter performance, wherein the stock lost 19.8% on the coronavirus scare.
Robust fundamentals, driven by steady revenue growth, low debt level and strong capital-deployment activities seem to have led to this impressive stock performance. Further, signs of an economic recovery post the coronavirus mayhem might act as a catalyst. Also, performance of equity markets has been favorable, quarter to date, as reflected by the 18.02% rally of the S&P 500 Index which might result in higher assets under management (AUM) further.
The Zacks Rank #2 (Buy) stock has been witnessing upward earnings estimate revisions. Over the past 30 days, the Zacks Consensus Estimate for the same moved up 6.5% to $7.19 for 2020 and 8.7% for 2021.
While it might not witness a similar share-price performance in the future, we believe the following factors are adequate to support steady price appreciation.
Revenue Growth: Net revenues of T. Rowe Price witnessed a five-year compound annual growth rate of 7.5% (2015-2019), with the trend continuing in the first quarter of 2020. Furthermore, the company remains focused on fortifying its business.
Through its planned initiatives, T. Rowe Price aims to launch investment strategies and vehicles, enhance client engagement capabilities, strengthen distribution channel in various geographic locations, improve its technology platform and derive long-term cost efficiencies. Such efforts are likely to boost revenues. The Zacks Consensus Estimate for the company’s revenues suggests year-over-year growth of 3.5% for 2021.
Earnings Strength: T. Rowe Price’s earnings witnessed 15.5% rise in the past three-five years compared with the industry’s 7.4% growth. The momentum is anticipated to continue in the near term as well. The Zacks Consensus Estimate for the company’s earnings suggests year-over-year growth of 6.1% for 2021.
Also, its long-term (three-five years) expected earnings growth rate of 9.27% promises rewards for shareholders.
Strong Capital Deployment: This February, T. Rowe Price hiked its quarterly common stock dividend by 18.4%. This marked the company’s 34th consecutive annual dividend increase. Further, its board of directors increased the common share-repurchase authorization by 10 million shares, bringing the total authorization to about 22.4 million shares. Such efforts reflect its consistency in enhancing shareholder value.
Superior Return on Equity (ROE):T. Rowe Price’s ROE is 29.22% compared with the industry’s 12.55%. This highlights the company’s commendable position over its peers.
Favorable VGM Score: T. Rowe Price has a VGM Score of B. Our research shows stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Strong Leverage: T. Rowe Price’s debt/equity ratio is 0.03 compared with the industry’s 0.21. This reflects that the bank will be financially stable, even during adverse economic situations.
Other Stocks to Consider
State Street Corporation (STT - Free Report) has witnessed upward earnings estimate revisions for 2020 over the past 30 days. Moreover, this Zacks #2 Ranked stock has gained 24.7% over the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
GAIN Capital Holdings, Inc.’s current-year earnings estimate moved north in 30 days’ time. Further, the company’s shares have rallied 4.4% over the past three months. At present, it carries a Zacks Rank of 2.
Mercantile Bank Corporation (MBWM - Free Report) has witnessed upward earnings estimate revisions for the ongoing year in the past 30 days. This Zacks #1 Ranked stock has depreciated 4.4% over the past three months.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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T. Rowe Price (TROW) Gains 23.9% QTD: Will the Rally Continue?
Shares of T. Rowe Price (TROW - Free Report) have rallied 23.9%, quarter to date, compared with the industry’s rally of 27.5%. This marks a significant turnaround from the dismal first-quarter performance, wherein the stock lost 19.8% on the coronavirus scare.
Robust fundamentals, driven by steady revenue growth, low debt level and strong capital-deployment activities seem to have led to this impressive stock performance. Further, signs of an economic recovery post the coronavirus mayhem might act as a catalyst. Also, performance of equity markets has been favorable, quarter to date, as reflected by the 18.02% rally of the S&P 500 Index which might result in higher assets under management (AUM) further.
The Zacks Rank #2 (Buy) stock has been witnessing upward earnings estimate revisions. Over the past 30 days, the Zacks Consensus Estimate for the same moved up 6.5% to $7.19 for 2020 and 8.7% for 2021.
While it might not witness a similar share-price performance in the future, we believe the following factors are adequate to support steady price appreciation.
Revenue Growth: Net revenues of T. Rowe Price witnessed a five-year compound annual growth rate of 7.5% (2015-2019), with the trend continuing in the first quarter of 2020. Furthermore, the company remains focused on fortifying its business.
Through its planned initiatives, T. Rowe Price aims to launch investment strategies and vehicles, enhance client engagement capabilities, strengthen distribution channel in various geographic locations, improve its technology platform and derive long-term cost efficiencies. Such efforts are likely to boost revenues. The Zacks Consensus Estimate for the company’s revenues suggests year-over-year growth of 3.5% for 2021.
Earnings Strength: T. Rowe Price’s earnings witnessed 15.5% rise in the past three-five years compared with the industry’s 7.4% growth. The momentum is anticipated to continue in the near term as well. The Zacks Consensus Estimate for the company’s earnings suggests year-over-year growth of 6.1% for 2021.
Also, its long-term (three-five years) expected earnings growth rate of 9.27% promises rewards for shareholders.
Strong Capital Deployment: This February, T. Rowe Price hiked its quarterly common stock dividend by 18.4%. This marked the company’s 34th consecutive annual dividend increase. Further, its board of directors increased the common share-repurchase authorization by 10 million shares, bringing the total authorization to about 22.4 million shares. Such efforts reflect its consistency in enhancing shareholder value.
Superior Return on Equity (ROE): T. Rowe Price’s ROE is 29.22% compared with the industry’s 12.55%. This highlights the company’s commendable position over its peers.
Favorable VGM Score: T. Rowe Price has a VGM Score of B. Our research shows stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Strong Leverage: T. Rowe Price’s debt/equity ratio is 0.03 compared with the industry’s 0.21. This reflects that the bank will be financially stable, even during adverse economic situations.
Other Stocks to Consider
State Street Corporation (STT - Free Report) has witnessed upward earnings estimate revisions for 2020 over the past 30 days. Moreover, this Zacks #2 Ranked stock has gained 24.7% over the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
GAIN Capital Holdings, Inc.’s current-year earnings estimate moved north in 30 days’ time. Further, the company’s shares have rallied 4.4% over the past three months. At present, it carries a Zacks Rank of 2.
Mercantile Bank Corporation (MBWM - Free Report) has witnessed upward earnings estimate revisions for the ongoing year in the past 30 days. This Zacks #1 Ranked stock has depreciated 4.4% over the past three months.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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