TROW Stock Study (10-18-25)
Posted by Mark on December 19, 2024 at 06:58 | Last modified: October 19, 2025 11:22I recently did a stock study on T. Rowe Price Group, Inc. (TROW, $103.15). Previous study is here.
M* writes:
> T. Rowe Price provides asset management services for individual
> and institutional investors. It offers a broad range of no-load
> US and international stock, hybrid, bond, and money market funds…
> Approximately two-thirds of managed assets are held in retirement-
> based accounts, which provides T. Rowe Price with a somewhat
> stickier client base than most of its peers. The firm also
> manages private accounts, provides retirement planning advice,
> and offers discount brokerage and trust services. The company
> is primarily a US-based asset manager, deriving less than 10%
> of its AUM from overseas.
Over the last decade, this medium-size company has grown sales and EPS at annualized rates of 6.5% and 7.6%, respectively. Lines are up, straight, and parallel except for sales dips in ’22 (large) and ’23 and EPS dip in ’22. Five- (10-) year EPS R^2 is 0.19 (0.46) and Value Line (VL) gives an Earnings Predictability rating of 90.
Over the last decade, PTPM leads peer and industry averages despite falling from 47.7% (’15) to 39.7% (’24) with a last-5-year mean of 42.5%. ROE also leads peer and industry averages despite falling from 24.8% (’15) to 19.9% (’24) with a last-5-year mean of 24.7%. The company has no long-term debt and is therefore lower than peers and the industry on Debt-to-Capital with a last-5-year mean of 2.8% (rentals).
Quick Ratio is 10.95 with Interest Coverage N/A (consistent with no long-term debt) per M* who assigns a “Narrow” Economic Moat, gives an “Exemplary” rating for Capital Allocation, and offers an A grade for Financial Health. VL rates the company A+ for Financial Strength.
With regard to sales growth:
- YF projects YOY 4.0% and 6.2% for ’25 and ’26, respectively (based on 6 analysts).
- Zacks projects YOY 2.4% and 6.3% per year for ’25 and ’26, respectively (4 analysts).
- VL projects 7.1% annualized growth from ’24-’29.
- M* gives a 2-year ACE of 2.9% annualized growth and projects 6.9% from ’25-’29 in its analyst note.
My 2.0% forecast is below the range.
With regard to EPS growth:
- MarketWatch projects annualized growth of 1.2% and 2.2% for ’24-’26 and ’24-’27 (based on 16 analysts).
- Nasdaq.com gives ACE of 5.9% YOY and 2.9% per year for ’26 and ’25-’27 (7 / 7 / 5 analysts for ’25 / ’26 / ’27).
- Seeking Alpha projects 4-year annualized growth of 2.0%.
- Finviz gives 5-year ACE of 3.4% per year (4).
- Argus projects 5-year annualized growth of 10.0%.
- LSEG gives LTG projection of -3.2%.
- YF projects YOY growth of 0.9% and 7.7% for ’25 and ’26, respectively (14).
- Zacks projects YOY growth of 0.5% and 5.6% for ’25 and ’26 (7) along with 5-year annualized of 1.9%.
- VL projects 7.3% annualized growth from ’24-’29.
- CFRA projects 2.8% contraction YOY and 0.6% per year for ’25 and ’24-’26 along with a 3-year CAGR of +5.0%.
- M* projects long-term annualized growth of 3.0%.
My 0.5% per year forecast is toward bottom of the long-term-estimate range (mean of seven: 3.5%). My initial value is 2025 Q2 EPS of $8.95/share (annualized) instead of ’24 EPS of $9.15.
My Forecast High P/E is 13.0. Over the last 10 years, high P/E decreases from 18.8 (’15) to 13.7 (’24) with a last 5-year mean of 15.9 (29.7 outlier in ’22 excluded) and last 5-year-mean average P/E of 13.5. I am below the range.
My Forecast Low P/E is 8.0. Over the last 10 years, low P/E decreases from 14.2 (’15) to 11.0 (’24) with a last-5-year mean of 11.1. I am forecasting below the range and current P/E (14.8).
My Low Stock Price Forecast (LSPF) of $71.60 is default based on initial value given above. This is 30.6% (8.0%) less than the previous close (52-week low).
Over the past decade, Payout Ratio ranges from 32.9% in ’21 to 71.6% in ’22 with a last-5-year mean of 51.5%. I am forecasting below the range at 32.0%.
These inputs land TROW in the HOLD zone with a U/D ratio of 0.5. Total Annualized Return (TAR) is 5.4%.
PAR (using Forecast Average—not High—P/E) is less than the current risk-free rate (T-bills) at 1.7%. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead (still less than I seek in a medium-size company).
To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 78 studies done in the past 90 days (my study and 27 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and Payout Ratio are 5.2%, 5.8%, 15.0, 10.7, and 47.4%. I am lower across the board. VL projects a future average annual P/E of 13.0, which is higher than MS (12.9) and higher than mine (10.5).
MS high / low EPS are $12.01 / $8.79 versus my $9.18 / $8.95 (per share). My high EPS is less due to a lower growth rate. VL’s high EPS soars above both at $13.00.
MS LSPF of $89.30 implies a Forecast Low P/E of 10.2: less than the above-stated 10.7. MS LSPF is 5.1% less than the default $8.79/share * 10.7 = $94.05 resulting in more conservative zoning. MS LSPF is still 24.7% greater than mine.
I believe MOS is robust in this study because my inputs are near or below respective analyst/historical ranges and MS averages. MS TAR of 14.8% is 9.4% per year greater than mine.
With regard to valuation, PEG is 5.7 and 22.9 (fractional growth rate) per Zacks and my projected P/E, respectively: significantly overvalued (also by M* at 9.4). Relative Value [(current P/E) / 5-year-mean average P/E] is cheap at 0.85.
Per U/D, TROW is a BUY under $83/share. BI TAR criterion is met ~ 119.3 / ((12.37 / 100 ) +1 ) ^ 5 = $66.50 given forecast high price ~$119.
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