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T. Rowe Price Group Inc TROW

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T. Rowe Price: Lowered Moat Rating to Narrow Despite Firm Having Wide-Moat Characteristics

Greggory Warren

We've lowered our moat rating for T. Rowe Price to narrow from wide. Our fair value estimate remains in place at $115 per share. While T. Rowe Price has wide-moat-worthy characteristics—like a well-respected brand, attractive distribution with high retention rates, repeatable investment strategies, reasonable fees, and an impressive track record of excess returns—we've seen a large enough deterioration in the firm's qualitative and quantitative attributes the past five years to warrant taking the moat down a notch.

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Price vs Fair Value

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TROW is trading at a 197% premium.
Price
$107.34
Fair Value
$938.00
Uncertainty
High
1-Star Price
$851.86
5-Star Price
$63.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

With $1.612 trillion in AUM at the end of August 2024, T. Rowe Price is one of the larger US-based asset managers. Retirement accounts and variable-annuity portfolios, which are stickier than retail assets, account for two thirds of managed assets.

Bears

The company's equity performance has been weak of late, with just 41% and 31% of fund AUM beating passive peer medians on a 3- and 5-year basis, respectively, at the end of June 2024.

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Trading Information

Previous Close Price
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Day Range
—–—
52-Week Range
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Bid/Ask
— / —
Market Cap
—
Volume/Avg
— / —

Key Statistics

Price/Earnings (Normalized)
12.58
Price/Sales
3.54
Dividend Yield (Trailing)
4.60%
Dividend Yield (Forward)
4.62%
Total Yield
6.27%

Company Profile

T. Rowe Price provides asset-management services for individual and institutional investors. It offers a broad range of no-load US and international stock, hybrid, bond, and money market funds. At the end of August 2024, the firm had $1.612 trillion in managed assets, composed of equity (51%), balanced (34%), fixed-income and money market (12%), and alternative (3%) offerings. Approximately two thirds of managed assets are held in retirement-based accounts, which provides T. Rowe Price with a somewhat stickier client base than most of its peers. The firm also manages private accounts, provides retirement planning advice, and offers discount brokerage and trust services. The company is primarily a US-based asset manager, deriving less than 10% of its AUM from overseas.
Sector
Financial Services
Industry
Asset Management
Stock Style Box
Mid Value
Total Number of Employees
7,929
Website
https://www.troweprice.com

Competitors

Valuation

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Metric
TROW
BEN
IVZ
Price/Earnings (Normalized)
 12.587.5011.25
Price/Book Value
 2.410.810.76
Price/Sales
 3.541.211.39
Price/Cash Flow
 16.247.614.84
Price/Earnings
TROW
BEN
IVZ

Financial Strength

Metric
TROW
BEN
IVZ
Quick Ratio
 9.353.481.88
Current Ratio
 9.353.481.88
Interest Coverage
 —15.08−2.26
Quick Ratio
TROW
BEN
IVZ

Profitability

Metric
TROW
BEN
IVZ
Return on Assets (Normalized)
 15.25%4.44%2.50%
Return on Equity (Normalized)
 20.19%11.27%6.60%
Return on Invested Capital (Normalized)
 17.04%4.98%2.96%
Return on Assets
TROW
BEN
IVZ

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