5 Reasons Why T. Rowe Price (TROW) Is An Attractive Pick

Given its diverse business model and launch of new 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 expenses might escalate for T. Rowe Price due to potential investments in technology and several planned strategic initiatives, sharper focus on organic growth is expected to make the growth path more smooth for the company.

The Finance sector was one of the best performers in the first quarter reporting cycle. So, we thought of bringing up a stock from the sector that reflects strong fundamentals and solid long-term growth opportunity.

T. Rowe Price has been witnessing upward estimate revisions, reflecting analysts’ optimism about its future prospects. Over the last 30 days, the Zacks Consensus Estimate for 2017 and 2018 increased 1.8% and around 1%, respectively.

Further, this Zacks Rank #2 (Buy) stock has gained 6.4% over the past one year, compared with 29.6% growth recorded by the Zacks categorized Investment Management industry.

Notably, T. Rowe Price has a number of other aspects that make it an attractive investment option.

5 Reasons Why T. Rowe Price is a Golden Egg

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 first-quarter 2017.

The company’s projected sales growth (F1/F0) of 8.6% (as against the 3.5% industry average) indicates constant upward momentum in revenues.

Earnings Per Share Strength: T. Rowe Price witnessed earnings growth of 1.15% over the last three–five years. In addition, the company’s long-term (three–five years) estimated EPS growth rate of 9.7% promises rewards for investors, over the long run.

Steady Capital Deployment: In Feb 2017, the company hiked 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 Dec 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 0.09, 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 21.8%, compared with the industry average of 10.7%, indicates the company’s commendable position over its peers.

Other Stocks to Consider

BlackRock, Inc. (NYSE:BLK) has been witnessing upward estimate revisions for the last 30 days. Additionally, the stock jumped over 31% in the past one year. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Artisan Partners Asset Management Inc. (NYSE:APAM) has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 9.4% in the past one year. It presently holds a Zacks Rank #2.

KKR & Co. L.P. (NYSE:KKR) has been witnessing upward estimate revisions for the last 60 days. In the past one year, the company’s share price has been up more than 51%. It also carries a Zacks Rank #2.

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