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What's in the Cards for T. Rowe Price (TROW) in Q1 Earnings?

·5 min read

T. Rowe Price Group, Inc. TROW is scheduled to report first-quarter 2022 results before the opening bell on Apr 28. Although TROW’s earnings are projected to decline from the year-ago reported figures, revenues are expected to grow.

In the last reported quarter, T. Rowe Price’s earnings outpaced the Zacks Consensus Estimate on higher revenues, backed by an upsurge in investment advisory fees, and administrative, distribution and servicing fees. However, escalating expenses were an undermining factor.

T. Rowe Price has a decent earnings surprise history. Earnings outpaced estimates in three of the trailing four quarters, missing the mark in one, the average surprise being 2.1%.

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

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

TROW’s activities during the quarter were inadequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate of $2.75 for first-quarter earnings has moved 1.4% south over the past week. Moreover, it indicates a decline of 8.6% from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate of $1.86 billion for revenues suggests a 2% rise from the prior-year quarter’s reported number.

Major Factors at Play

Overall Outflows Likely: T. Rowe Price has been recording net outflows every month in the first quarter of 2022 due to unfavorable equity markets. The preliminary month-end assets under management of $1.55 trillion, as of Mar 31, 2022, compares unfavorably with $1.68 trillion as of Dec 31, 2021. The onset of the Russia-Ukraine war has hurt investor sentiments and dampened the equity market performance. On the other hand, fixed income markets are likely to produce low returns as well in the first quarter. Hence, T. Rowe Price is likely to have witnessed a decrease in AUM due to overall outflows in equities and fixed income during the to-be-reported quarter besides modest client activities.

Revenue Growth: T. Rowe Price’s efforts to improve its operating efficiency have resulted in year-over-year top-line growth over the past few years. We believe TROW is well poised to sustain this encouraging uptrend in the first quarter as well. This comes on the back of several planned initiatives, largely tied with launching investment strategies and vehicles, enhancing client-engagement capabilities in each distribution channel, strengthening distribution channels in the United States, EMEA and the Asia Pacific, and boosting T. Rowe Price’s technology platform.

Further, benefits derived from the acquisition of Oak Hill Advisors, L.P., which was closed in December, will be reflect in the first-quarter results. The acquisition has bulked up T. Rowe Price’s offerings in the alternative investment market space, which might have helped increase both revenues and investment management margin of the company.

Rising Expenses: T. Rowe Price is expected to have incurred higher employee expenses due to rising salaries on account of inflation. Further, the company’s initiatives to attract new investment advisory clients and additional investments from its existing clients are expected to have led to significant expenditures. Last year, the company had transformed the responsibility of its full-service retirement record-keeping business to Fidelity National, which helps in technology development as well. T. Rowe Price expects to incur certain technology-related costs as a part of this expanded relationship with Fidelity National. Thus, overall expenses are expected to rise in the quarter under review.

Earnings Whispers

The proven Zacks model does not predict an earnings beat for T. Rowe Price this time around. This is because T. Rowe Price does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: T. Rowe Price has an Earnings ESP of 0.00%.

Zacks Rank: T. Rowe Price currently carries a Zacks Rank of 3.

Stocks That Warrant a Look

A couple of finance stocks that you may want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases per our model, are Northern Trust Corporation NTRS and Independent Bank Corporation IBCP.

The Earnings ESP for NTRS is +0.06%. Northern Trust carries a Zacks Rank #3 at present. NTRS is slated to report results on Apr 26.

The Zacks Consensus Estimate for NTRS’s first-quarter earnings has moved 1.2% south over the past month.

IBCP is also scheduled to release quarterly results on Apr 26. IBCP currently has a Zacks Rank #2 (Buy) and an Earnings ESP of +10.00%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for IBCP’s first-quarter earnings has remained flat over the past month.

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

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Northern Trust Corporation (NTRS) : Free Stock Analysis Report

T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report

Independent Bank Corporation (IBCP) : Free Stock Analysis Report

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