What’s T. Rowe’s Valuation?



Higher valuations

T. Rowe Price Group’s (TROW) one-year forward price-to-earnings ratio stood at 17.69x, which implies a premium valuation. T. Rowe’s peers have an average one-year forward price-to-earnings ratio of 16.17x. BlackRock (BLK), Invesco Limited (IVZ), and Federated Investors (FII) have one-year forward price-to-earnings ratios of 20.90x, 13.21x, and 14.41x, respectively.

T. Rowe has higher valuations because of the substantial YoY rise in net revenues in 3Q17. The company has also witnessed a substantial 15.3% YoY rise in its net operating income in 3Q17. It reported net operating income of $548.5 million in 3Q17 compared to $475.7 million in 3Q16. T. Rowe has also witnessed significant net inflows in its assets under management (or AUM) in 3Q17.

Article continues below advertisement


In the first three quarters of 2017, T. Rowe has repurchased 6.6 million shares for a sum totaling $456.7 million. Out of this, $9.7 million has been spent in relation to repurchases in 3Q17. According to the top management, the company will incur capital expenditures of up to $200 million for 2017. The company estimates that of the total capex, around two-thirds would be related to technology.

T. Rowe Price Group has a price-to-earnings ratio of 15.34x. Industry peers (XLF) BlackRock (BLK), Federated Investors (FII), and Invesco Limited (IVZ) have price-to-earnings ratios of 21.81x, 14.61x, and 15.28x, respectively.


More From Market Realist