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What’s T. Rowe’s Valuation?

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Dec. 4 2020, Updated 10:53 a.m. ET

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.

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Distributions

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.

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