Given its focus on fortifying business through several planned initiatives and improving its technology platform, T. Rowe Price Group, Inc. TROW appears to be a solid bet right now. The company’s mix shift toward international growth funds and negligible debt position are anticipated to drive the stock.
Though T. Rowe Price’s expenses might escalate due to potential investments in technology and several planned strategic initiatives, focus on organic growth is anticipated to make growth path smoother for the company.
T. Rowe Price has been witnessing upward estimate revisions, reflecting analysts’ optimism about its prospects. Over the past 60 days, the Zacks Consensus Estimate for 2019 and has 2020 has moved nearly 1% and 1.2% upward, respectively. Thus, the stock currently sports a Zacks Rank #1 (Strong Buy).
The company’s price performance also looks impressive. Its shares have rallied 18.1% over the past six months, outperforming the industry’s rise of 16.2%.
5 Reasons Why T. Rowe Price is a Solid Pick
Revenue growth: Organic growth remains a key strength for T. Rowe Price, as reflected in its revenue growth story. Net revenues have witnessed a 7.8% CAGR over the last five years (2014-2018). The trend will continue, with the top line expected to increase 3.7% for 2019 and 5.9% for 2020.
Earnings strength: T. Rowe Price witnessed earnings growth of 11.3%, over the last three-five years. This momentum is expected to continue in the near term, as evident from its projected earnings growth rate of 3.7% and 3.1% for 2019, and 2020, respectively.
Further, the company’s long-term (three to five years) expected earnings growth rate of 9% promises rewards for shareholders.
Steady capital deployment: T. Rowe Price consistently enhances shareholders’ value through robust capital-deployment activities. In February, it raised quarterly dividend by 8.6%, marking the 33rd consecutive annual hike. 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.
Strong leverage: T. Rowe Price’s debt/equity ratio is 0.03 compared with the industry average of 0.44. The relatively strong financial health of the company will likely help it perform better than its peers in a dynamic business environment.
Superior Return on Equity (ROE): T. Rowe Price’s ROE of 28.93% compared with the industry average of 13.46%, indicates the company’s commendable position over its peers.
Other Asset Managers to Consider
The Zacks Consensus Estimate for earnings for Legg Mason, Inc. LM has increased nearly 1% over the past 30 days. Its shares have rallied 47.8% so far this year. The stock currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Franklin Resources, Inc. BEN currently sports a Zacks Rank #1. The company’s 2019 earnings estimates have moved upward slightly over the past 30 days. Its shares have rallied 17.8% so far this year.
Ameriprise Financial, Inc.’s AMP earnings estimates for the current year have remained stable over the past 30 days. Its shares have surged 42.7% year to date. The stock presently has a Zacks Rank #2 (Buy).
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