Bottom-Line Growth Picking Up At T. Rowe Price


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Besides strong growth, another thing that's bullish is accelerating growth.T. Rowe Price Group ( TROW ) is seeing that in its earnings.

The money manager's profit growth accelerated from 6% in Q3 of 2013 to 20% in Q4 and 23% in the first quarter. The gain in Q1 marked its best performance in six quarters. Sales in the most recent four quarters rose 15% to 18%.

Higher fees, market appreciation and client inflows have lifted results in recent quarters. The company depends largely on investment advisory fees, which are based on the amount of assets under management. Last year, investment advisory fees made up 87% of total revenue.

In the second through fourth quarters of 2013, T. Rowe noted outflows from big institutional clients, but there was no mention of that in the latest reported quarter. Assets under management climbed to a record $711.4 billion in the first quarter from $617.4 billion in the year-ago period.

T. Rowe's earnings are slated to rise 21% to $1.11 in the second quarter. For all of 2014, analysts see profit growing 17% to $4.56 a share. That growth would mark a third-straight year of accelerating increases. Earnings per share rose 15% in 2012 and 16% in 2013.

Since going public in 1986, T. Rowe has raised its shareholder dividend for 28 straight years. It is a member of the S&P 500 Dividend Aristocrats index. In February, T. Rowe bumped up its dividend by 16% to the present quarterly rate of 44 cents a share. Its dividend has jumped 83% since 2008.

On an annualized basis, the company pays $1.76 a share, which works out to a yield of about 2%. Although that's one of the lowest yields in the Finance-Investment Management industry group, T. Rowe is one of the better-rated stocks by Composite Rating.

T. Rowe shares found support near the 50-day moving average Monday. It is forming a base with resistance around 84.50.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance Investing Ideas
Referenced Stocks: TROW

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