T. Rowe Price’s (TROW) net revenue comprises three components: investment advisory fees, distribution and servicing fees, and administrative fees. The company’s net revenue rose 13.5% to $4.8 billion in 2017 from $4.2 billion in 2016.
Between 2016 and 2017, the company’s investment advisory fees rose 15% from $3.7 billion to $4.3 billion, due to its average assets under management rising 16.8%. T. Rowe Price’s investment advisory fees rose to $1.2 billion in 4Q17 from $966.8 million in 4Q16.
Whereas T. Rowe Price has a last-12-month enterprise-value-to-revenue ratio of 5.5x, peers (XLF) BlackRock (BLK), Financial Engines (FNGN), and Franklin Resources (BEN) have ratios of 7.3x, 4.0x, and 2.5x, respectively.
Other two components
T. Rowe Price’s administrative fees rose to $352.5 million in 2016 from $358.3 million in 2017, mainly because of administrative servicing activities for the company’s US mutual funds and investors. Administrative fees rose to $92.1 million in 4Q17 from $88.9 million in 4Q16.
The company’s distribution and servicing fees rose to $147 million in 2017 from $141.7 million in 2016. In the next article, we’ll look at T. Rowe Price’s operating expenses.