Given its diverse business model and launch of investment strategies and vehicles, T. Rowe Price Group, Inc. (NASDAQ:TROW) appears to be a solid bet. The company’s mix shift toward international growth funds and debt-free position are anticipated to drive the stock.
Though T. Rowe Price’s expenses might escalate due to potential investments in technology and several planned strategic initiatives, sharper focus on organic growth is anticipated to make the growth path smoother for the company.
The Finance sector was one of the best performers in the second-quarter reporting cycle. So, we thought of bringing up a stock from the sector that reflects strong fundamentals and solid long-term growth opportunities.
T. Rowe Price has been witnessing upward estimate revisions, reflecting analysts’ optimism about its future prospects. Over the last 60 days, the Zacks Consensus Estimate for 2017 and 2018 inched up 1.8% and around 1.5%, respectively.
Further, this Zacks Rank #2 (Buy) stock has gained 33.2% over the past year compared with 26.1% growth recorded by the industry.
Notably, T. Rowe Price has a number of other aspects which make it an attractive investment option.
5 Reasons Why T. Rowe Price is an Attractive Pick
Revenue Growth: Organic growth remains a key strength at T. Rowe Price, as reflected in its revenue growth story. Net revenues demonstrated 8.7% CAGR over the last five years (2012-2016), with the rising trend continuing in the first half of 2017.
The company’s projected sales growth (F1/F0) of 11.3% (as against the 4.4% industry average) indicates constant upward momentum in revenues.
Earnings Per Share Strength: T. Rowe Price witnessed earnings growth of 8.7% over the last three-five years. In addition, the company’s long-term (three-five years) estimated EPS growth rate of 9.8% promises rewards for investors, over the long run. Further, earnings are anticipated to display an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 28.1% compared to the industry average rate of 13.1%.
Steady Capital Deployment: In February 2017, the company raised its quarterly common stock dividend by 5.6%. This marked T. Rowe Price’s 31st consecutive annual dividend increase and reflected its commitment to return value to shareholders with its strong cash-generation capabilities. In December 2015, T. Rowe Price’s board of directors approved an increase in the company’s share repurchase authorization by 12 million. This approval enhances the total repurchase authorization to 20.9 million shares.
Strong Leverage: T. Rowe Price’s debt/equity ratio is 0.00 compared with the industry average of 0.07, displaying no debt burden relative to the industry. It highlights the financial stability of the company even in an unstable economic environment.
Superior Return on Equity (ROE): T. Rowe Price’s ROE of 24.4%, compared with the industry average of 12.2%, indicates the company’s commendable position over its peers.
Other Stocks to Consider
Other top-ranked stocks in the same space are Community Bank System, Inc. (NYSE:CBU) with a Zacks Rank #1 (Strong Buy), while First Commonwealth Financial Corporation (NYSE:FCF) and Salisbury Bancorp, Inc. (NASDAQ:SAL) carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Community Bank System’s earnings estimates have been revised 6.1% upward for 2017, in the past 60 days. Also, its share price surged 12.1% over the last year.
First Commonwealth Financial’s earnings estimates for 2017 have been revised 2.6% upward, over the last 60 days. Further, in a year’s time, the company’s shares have jumped 34.7%.
Salisbury Bancorp witnessed a 2.4% upward earnings estimates revision for the current year, over the last 60 days. Moreover, in the past year, its shares have gained 47.2%
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Community Bank System, Inc. (CBU): Free Stock Analysis Report
First Commonwealth Financial Corporation (FCF): Free Stock Analysis Report
T. Rowe Price Group, Inc. (TROW): Free Stock Analysis Report
Salisbury Bancorp, Inc. (SAL): Free Stock Analysis Report
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