T. Rowe Price Group Earnings: Here’s Why Investors are Dumping Shares Now

T. Rowe Price Group, Inc. (NASDAQ:TROW) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 3%.

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T. Rowe Price Group, Inc. Earnings Cheat Sheet

Results: Net income increased 23.14% to $232 million (88 cents per diluted share) in the quarter versus a net gain of $188.4 million in the year-earlier quarter.

Revenue: Rose 14.43% to $783.3 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: T. Rowe Price Group, Inc. reported adjusted net income of 88 cents per share. By that measure, the company missed the mean analyst estimate of $0.89. It missed the average revenue estimate of $799.41 million.

Quoting Management: James A.C. Kennedy, the company’s chief executive officer and president, commented, “We remain cautiously optimistic on the fundamentals of many corporations around the globe. Company balance sheets are generally in good shape, and many corporations are generating strong cash flow. Political, economic and growth uncertainties remain, so volatility should be expected. However, expectations and valuations in the equity markets remain reasonable. The fixed income markets are less appealing, with yields driven to near record lows by a series of governmental stimulus programs. Savers have been hurt by these low rates, and risk-takers rewarded. Opportunities still exist in the fixed income markets, but risks are now rising; consequently, credit research and selectivity will be more and more important.”

Key Stats:

Revenue decreased 3.43% from $811.1 million in the previous quarter. Net income decreased 6.19% from $247.3 million in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.89 to a profit $0.88. For the current year, the average estimate has moved up from a profit of $3.36 to a profit of $3.38 over the last ninety days.

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(Company fundamentals provided by Xignite Financials.)