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T Rowe Price (TROW)
NASDAQ:TROW
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T Rowe Price
(NASDAQ:TROW)
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Rating:73Outperform
Price Target:
$103.00
â–²(7.99% Upside)
Action:ReiteratedDate:02/06/26
The score is primarily supported by strong financial strength (near-zero leverage, solid profitability, and robust free cash flow) and attractive valuation (low P/E and high dividend yield). These positives are tempered by weak technical momentum and a mixed earnings outlook driven by significant net outflows, fee pressure, and rising expense guidance.
Positive Factors
Conservative balance sheet
Near-zero debt and a growing equity base materially reduce solvency and refinancing risk, giving T. Rowe Price durable financial flexibility. Low leverage supports sustained dividend and buyback capacity, funds strategic investments, and cushions earnings during cyclical outflow periods.
Strong cash generation & capital returns
Robust free cash flow that matched net income in 2025 underpins consistent capital returns and discretionary investments. This cash-generation capacity supports buybacks/dividends and strategic deployment into growth areas (ETFs, alternatives), bolstering long-term shareholder support and financial resilience.
Product and distribution momentum
Accelerated ETF launches and sustained fixed-income inflows diversify distribution and revenue sources, reducing reliance on single-product channels. Growing ETF and alternatives franchises expand scale in structurally growing segments, improving long-term fee capture and client stickiness across market cycles.
Negative Factors
Large net outflows
Substantial, concentrated outflows materially reduce revenue base and pressure margins because fees are AUM-linked. Persistent redemptions from equities and mutual funds can erode higher-fee assets, force reallocation or fund-level changes, and leave longer-term revenue growth vulnerable to market and performance cycles.
Fee pressure from vehicle mix shift
A structural industry move to ETFs, SMAs and lower-priced solutions compresses average fees for an active manager. As T. Rowe is a leading fully active target-date manager, this secular shift can sustainably depress revenue per asset absent successful repricing, higher-margin product growth, or scale gains.
Earnings sensitivity to markets & expense growth
Heavy dependence on equity market appreciation makes revenues and margins cyclical; with 2026 expense guidance (+3%–6%) and a meaningful variable cost base, weaker markets or continued outflows could quickly compress margins and cash flow, reducing earnings predictability over the medium term.
T Rowe Price (TROW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$20.70B
Dividend Yield4.88%
Average Volume (3M)2.04M
Price to Earnings (P/E)10.3
Beta (1Y)1.11
Revenue Growth4.26%
EPS Growth0.42%
CountryUS
Employees8,084
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)2.44
Shares Outstanding218,072,900
10 Day Avg. Volume1,971,701
30 Day Avg. Volume2,040,003
Financial Highlights & Ratios
PEG Ratio12.60
Price to Book (P/B)2.11
Price to Sales (P/S)3.13
P/FCF Ratio0.00
Enterprise Value/Market Cap0.86
Enterprise Value/Revenue2.43
Enterprise Value/Gross Profit3.88
Enterprise Value/Ebitda6.18
Forecast
1Y Price Target
$101.57Price Target Upside6.49% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering7
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
T Rowe Price Business Overview & Revenue Model
Company DescriptionT. Rowe Price Group, Inc. is a publicly owned investment manager. The firm provides its services to individuals, institutional investors, retirement plans, financial intermediaries, and institutions. It launches and manages equity and fixed income mutual funds. The firm invests in the public equity and fixed income markets across the globe. It employs fundamental and quantitative analysis with a bottom-up approach. The firm utilizes in-house and external research to make its investments. It employs socially responsible investing with a focus on environmental, social, and governance issues. It makes investment in late-stage venture capital transactions and usually invests between $3 million and $5 million. The firm was previously known as T. Rowe Group, Inc. and T. Rowe Price Associates, Inc. T. Rowe Price Group, Inc. was founded in 1937 and is based in Baltimore, Maryland, with additional offices in Colorado Springs, Colorado; Owings Mills, Maryland; San Francisco, California; New York, New York; Philadelphia, Pennsylvania; Tampa, Florida; Toronto, Ontario; Hellerup, Denmark; Amsterdam, The Netherlands; Luxembourg, Grand Duchy of Luxembourg; Zurich, Switzerland; Dubai, United Arab Emirates; London, United Kingdom; Sydney, New South Wales; Hong Kong; Tokyo, Japan; Singapore; Frankfurt, Germany, Madrid, Spain, Milan, Italy, Stockholm, Sweden, Melbourne, Australia, and Amsterdam, Netherlands.
How the Company Makes MoneyT. Rowe Price generates revenue primarily through management fees charged on the assets it manages on behalf of clients. These fees are typically a percentage of the assets under management (AUM) and vary by investment product. In addition to management fees, the company also earns performance fees when certain investment funds exceed specific benchmarks. Key revenue streams include the firm's mutual funds, separate accounts, and institutional investment products. Furthermore, T. Rowe Price benefits from a strong brand reputation and a commitment to long-term investment strategies, which help attract and retain clients. The company's partnerships with various financial institutions and platforms also contribute to its earnings by expanding distribution channels for its investment products.
T Rowe Price Key Performance Indicators (KPIs)
T Rowe Price Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Neutral
The call conveys a mixed but constructive picture: the firm delivered modest organic earnings and revenue growth, grew AUM to $1.78 trillion, launched products and partnerships, and showed strength in fixed income, ETFs, and alternatives fundraising. Offsetting these positives are significant net outflows concentrated in equities and mutual funds, one‑year performance weaknesses, declining performance‑based fees, and continued fee pressure from a shift to lower‑priced vehicles. Management emphasized strategic investments and expense discipline but acknowledged flow volatility and reliance on market returns.Q4-2025 Updates
Positive Updates
Assets Under Management Growth
Closed 2025 with $1.78 trillion AUM, up over 10% from the start of the year despite significant net outflows; equity market appreciation added nearly $50 billion of equity AUM during the year.
Revenue and EPS Growth
Full-year adjusted diluted EPS of $9.72, up 4.2% vs. 2024; Q4 adjusted diluted EPS $2.44. Full-year adjusted net revenue nearly $7.4 billion, up 2.8% year-over-year.
Investment Advisory Revenue Upside
Q4 investment advisory revenue $1.7 billion, up 4.2% year-over-year; full-year investment advisory revenue $6.6 billion, up 3.1% vs. prior year.
Strong Product & Distribution Momentum
Launched 13 ETFs in 2025 (bringing total to 30) with ETF AUM over $21 billion at year-end; Q4 ETF net inflows $1.8 billion and full-year ETF net inflows nearly $10.5 billion.
Target Date Franchise Strength (Long-Term)
Long-term target date performance strong on asset-weighted basis with 81% (3-year), 55% (5-year), and 98% (10-year) of fund assets outperforming peers.
Fixed Income and Alternatives Performance
Fixed income: over 75% of fund assets beat peers across 1-, 3-, 5-, and 10-year periods. Alternatives and private credit saw strong year-end deployment and continued robust pipeline.
Capital Return and Cash Position
Generated over $2 billion of free cash flow in 2025 and returned nearly $1.8 billion to shareholders; buybacks for 2025 totaled $624.6 million (2.8% of shares outstanding). Held $3.8 billion of cash discretionary investments, up $735 million year-over-year.
Strategic Partnerships and Global Expansion
Announced strategic collaboration with Goldman Sachs (co-branded model portfolios live on GS platform) and January 2026 strategic partnership with First Abu Dhabi Bank; retirement product expansions into Japan, Hong Kong and Singapore.
Organizational & Technology Advances
Created Technology, Data & Operations and Global Strategy functions; advanced AI adoption and continued investment in tokenization, digital capabilities and a registered active crypto ETF effort.
OHA and Private Markets Fundraising
Oak Hill Advisors (OHA) achieved a second consecutive record fundraising year with over $16 billion of capital raised and T. Rowe Price closed first managed private equity fund (first close Jan 2026).
Negative Updates
Large Net Outflows
Full-year net outflows totaled $56.9 billion, with Q4 outflows of $25.5 billion. Net outflows were concentrated in equity and mutual funds (stated $75 billion of equity outflows and nearly $64 billion from mutual funds on a vehicle basis in 2025).
One-Year Performance Weakness
One-year performance was weak on an asset-weighted basis: only 42% of fund assets beat peer groups for the one-year period; target date one‑year outperforming assets were 29%.
Performance-Related Redemptions
Redemptions were larger than anticipated and driven by performance shortfalls in certain strategies and portfolio rebalancing after elevated equity market returns, contributing materially to outflows.
Decline in Performance-Based Fees
Full-year performance‑based fees were $37.4 million in 2025, down from $59.3 million in 2024 (a decline of roughly 37%).
Fee Pressure from Vehicle Mix Shift
Q4 annualized effective fee rate (ex-performance fees) fell to 38.8 bps from 39.1 bps in Q3; the continuing shift toward lower‑priced vehicles (ETFs, trusts, SMAs, fixed income) is pressuring effective fees.
Expense Growth and 2026 Guidance
2025 adjusted operating expenses (ex‑carried interest) rose to $4.6 billion, up 3.4% vs. 2024 and within guidance. Company expects 2026 adjusted operating expenses to increase 3%–6%, which could pressure margins if revenue growth moderates.
Flows Volatility and Q4 Weakness
Flows were meaningfully softer than anticipated in Q4 (especially December). Retirement date outflows included lumpy losses and M&A-driven consolidations; January flows were also negative (company reported under $6 billion of outflows in January).
Headwind from Shift Away from Fully Active Target Date Funds
Industry shift toward passive and blend target date solutions is a headwind for T. Rowe Price as the largest fully active target date manager; fully active opportunities are losing share even though blend/hybrid is a growth area.
Dependence on Equity Market Returns
Management emphasized that a large portion of revenue and operating margin is driven by equity market returns and that variable expenses mean market performance materially influences financial outcomes.
Company Guidance
The company guided 2026 adjusted operating expenses (excluding carried interest) to rise 3%–6% versus 2025’s $4.6 billion (2025 adj. operating expenses ex-carried interest were $4.6B, up 3.4% from 2024’s $4.46B), noting this incorporates ongoing expense management (targeting low single‑digit growth on two‑thirds of controllable costs) and investments in growth areas while acknowledging one‑third of the expense base is variable and equity market returns remain the biggest driver of margins. Financials and flow context: Q4 adjusted diluted EPS was $2.44 and full‑year adjusted diluted EPS was $9.72 (up 4.2% Y/Y); Q4 adjusted net revenue was $1.9B and FY adjusted net revenue was nearly $7.4B (up 2.8% Y/Y); Q4 investment advisory revenue was $1.7B (+2.3% Q/Q, +4.2% Y/Y) and FY investment advisory revenue was $6.6B (+3.1% Y/Y) with a Q4 annualized effective fee rate ex-performance of 38.8 bps (down from 39.1 bps). Flows and balance sheet highlights: Q4 net outflows were $25.5B and full‑year outflows $56.9B, yet year‑end AUM totaled $1.78T (up >10% from the start of the year), equity AUM benefitted by nearly $50B of market appreciation, free flow exceeded $2B, ~$1.8B of cash was returned to shareholders, buybacks were $141M in Q4 and $624.6M for 2025 (2.8% of shares), and cash discretionary investments finished at $3.8B (up $735M). Operational/product metrics cited to frame the outlook included ETFs (13 launched in 2025, total 30, ETF AUM >$21B with $1.8B Q4 and ~$10.5B FY net inflows), target date net inflows of $5.2B for the year, fixed income’s eight consecutive quarters of positive flows, and lower full‑year performance fees ($37.4M in 2025 vs. $59.3M in 2024).T Rowe Price Financial Statement Overview
Summary
High-quality financial profile supported by an exceptionally conservative balance sheet (debt falling to zero in 2025), solid profitability (healthy net margins despite compression from 2020–2021 peaks), and strong free-cash-flow generation that rebounded meaningfully in 2024–2025. Key risk is cyclical earnings sensitivity and some cash-flow volatility tied to market conditions.Income Statement
Revenue has stabilized and modestly expanded in the last two annual periods (2024 and 2025) after declines earlier in the cycle (2022) and flat growth (2023). Profitability remains strong for the industry, with net margins staying healthy (roughly high-20%s in 2023–2025), though down materially from the 2020–2021 peak period when margins were much higher. Operating profitability (EBIT/EBITDA margins) is still solid, but the longer-term trend shows compression from 2021 levels, indicating earnings sensitivity to market/fee pressure.78
Positive
Balance Sheet
The balance sheet is exceptionally conservatively positioned: total debt is minimal and falls to zero in 2025, keeping leverage risk very low. Equity has grown steadily over the period, supporting a stronger capital base. Returns on equity are consistently attractive (high-teens to low-20%s recently), though they have moderated from the unusually strong 2020–2021 levels—suggesting profitability normalization rather than balance-sheet stress.92
Very Positive
Cash Flow
Cash generation is strong and generally supportive of earnings quality. Free cash flow has rebounded meaningfully since 2023 and grew sharply in 2025, with free cash flow matching net income in 2025 and covering a large portion of net income in prior years. The main weakness is volatility: operating and free cash flow swung materially across the cycle (notably the 2022 surge and 2023 drop), which is consistent with an asset-manager model tied to market conditions and working-capital/incentive timing.86
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 7.31B | 7.09B | 6.46B | 6.49B | 7.67B |
| Gross Profit | 4.58B | 3.68B | 3.21B | 3.57B | 4.68B |
| EBITDA | 2.88B | 2.98B | 2.52B | 3.14B | 3.91B |
| Net Income | 2.09B | 2.10B | 1.79B | 1.56B | 3.08B |
Balance Sheet | |||||
| Total Assets | 14.61B | 13.47B | 12.28B | 11.64B | 12.51B |
| Cash, Cash Equivalents and Short-Term Investments | 3.38B | 2.65B | 2.07B | 1.76B | 1.52B |
| Total Debt | 860.20M | 278.70M | 308.50M | 329.60M | 249.20M |
| Total Liabilities | 2.55B | 2.02B | 1.99B | 1.96B | 2.26B |
| Stockholders Equity | 10.86B | 10.35B | 9.51B | 8.84B | 9.02B |
Cash Flow | |||||
| Free Cash Flow | 0.00 | 1.26B | 911.20M | 2.12B | 3.21B |
| Operating Cash Flow | 1.75B | 1.69B | 1.22B | 2.36B | 3.45B |
| Investing Cash Flow | 230.30M | -177.50M | 128.20M | -41.50M | -1.10B |
| Financing Cash Flow | -1.28B | -936.60M | -1.08B | -2.08B | -2.99B |
T Rowe Price Technical Analysis
Negative
95.38
Price Trends
102.54
Negative
102.10
Negative
100.29
Negative
Market Momentum
-2.78
Positive
40.77
Neutral
50.71
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TROW, the sentiment is Negative. The current price of 95.38 is below the 20-day moving average (MA) of 98.87, below the 50-day MA of 102.54, and below the 200-day MA of 100.29, indicating a bearish trend. The MACD of -2.78 indicates Positive momentum. The RSI at 40.77 is Neutral, neither overbought nor oversold. The STOCH value of 50.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TROW.
T Rowe Price Risk Analysis
T Rowe Price disclosed 33 risk factors in its most recent earnings report. T Rowe Price reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
T Rowe Price Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $82.24B | 16.15 | 12.96% | 1.71% | 4.22% | 51.01% | |
76 Outperform | $9.95B | 14.43 | 29.38% | 1.18% | 9.33% | 33.17% | |
73 Outperform | $20.70B | 10.27 | 19.21% | 4.88% | 4.26% | 0.42% | |
73 Outperform | $27.90B | 16.88 | 13.37% | 2.21% | -4.52% | 7.01% | |
69 Neutral | $14.53B | 25.69 | 4.58% | 5.33% | 2.31% | 5.71% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
66 Neutral | $36.19B | 13.80 | 11.07% | 2.43% | 5.62% | 49.49% |
* Financial Sector Average
TROW
T Rowe Price
95.38
-5.82
-5.75%
BK
Bank of New York Mellon
118.19
32.00
37.12%
BEN
Franklin Resources
27.67
8.46
44.00%
SEIC
SEI Investments Company
81.39
2.32
2.93%
STT
State Street
127.94
32.25
33.71%
NTRS
Northern
144.76
34.96
31.84%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.