T. Rowe Price Q1 Earnings Beat on Higher Revenues & AUM, Stock Gains

T. Rowe Price Group, Inc.’s TROW first-quarter 2025 adjusted earnings per share of $2.23 beat the Zacks Consensus Estimate of $2.09. Nonetheless, the bottom line decreased 6.3% year over year.

Shares of TROW have rallied 1.9% in the pre-market trading on better-than-expected results.

TROW's results benefited from higher investment advisory fees and a rise in assets under management (AUM). On the other hand, higher expenses and negative capital allocation-based income were headwinds. 

Net income attributable to T. Rowe Price (on a GAAP basis) was $490.5 million, which declined 14.5% from the prior-year quarter. Our estimate for the metric was $439.8 million.

TROW’s Revenues Rise, Expenses Up

Net revenues grew almost 1% year over year to $1.76 billion. However, the top line missed the Zacks Consensus Estimate of $1.77 billion.

Investment advisory fees increased 4% to $1.6 billion. Our estimate for investment advisory fees was $1.63 billion.

Capital allocation-based income plunged significantly to negative $1.2 million from $47.1 million in the prior-year quarter. The fall was primarily due to the result of overall lower market returns. Our estimate for capital allocation-based income was negative $4.2 million.

Total operating expenses increased marginally to $1.17 billion in the reported quarter. Our estimate for the metric was $1.26 billion. On an adjusted basis, operating expenses were $1.14 billion, up 5.9%.

TROW’s AUM Rises, Liquidity Position Strong

As of March 31, 2025, total AUM grew 1.6% year over year to $1.57 trillion. Our projection was $1.69 trillion.

In the first quarter, net market depreciation and income of $31.7 billion unfavorably impacted T. Rowe Price’s AUM. Also, net cash outflows were $8.6 billion.

The company had substantial liquidity, including cash and cash equivalents of $2.84 billion as of March 31, 2025, up from $2.65 billion as of Dec. 31, 2024. This will enable TROW to keep investing.

TROW’s Capital Distribution Activities

T. Rowe Price distributed a total of $506 million to shareholders through common stock dividends and share repurchases in the first quarter.

Our View on TROW

TROW’s solid AUM balance, broadening distribution reach and efforts to diversify business through acquisitions are likely to support top-line growth. Solid liquidity aids sustainable capital distributions. However, an elevated expense base and excessive reliance on investment advisory fees are concerns. Further, the current tough operating environment is a headwind.
 

T. Rowe Price Group, Inc. Price, Consensus and EPS Surprise

T. Rowe Price Group, Inc. price-consensus-eps-surprise-chart | T. Rowe Price Group, Inc. Quote

Currently, TROW carries a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of T. Rowe Price’s Peers

Federated Hermes, Inc.’s FHI first-quarter 2025 adjusted earnings per share of $1.10 topped the Zacks Consensus Estimate of 91 cents. The bottom line grew 23.6% from the year-ago quarter. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)

Increased net administrative service fees and net investment advisory fees are major driving factors for FHI. The company’s total managed assets touched a record level. A rise in revenues and a decline in expenses were added advantages.

Invesco’s IVZ first-quarter 2025 adjusted earnings of 44 cents per share surpassed the Zacks Consensus Estimate of 39 cents. Moreover, the bottom line jumped 33.3% from the prior-year quarter.

IVZ’s results were primarily aided by higher adjusted net revenues. An increase in the AUM balance driven by decent inflows was positive too. However, higher adjusted operating expenses were woe.

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This article originally published on Zacks Investment Research (zacks.com).

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