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Shares of T. Rowe Price Group, Inc. TROW lost 1.8% in the pre-market trading session on lower-than-expected results. Its fourth-quarter 2024 adjusted earnings per share of $2.12 lagged the Zacks Consensus Estimate of $2.23. Nonetheless, the bottom line increased 23.3% year over year.
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TROW's results were affected by higher expenses. Nonetheless, net revenues were supported by a rise in assets under management (AUM). Further, appreciation in cash and cash equivalents will help the company to continue investing.
Net income attributable to T. Rowe Price (on a GAAP basis) was $439.9 million, which increased marginally year over year.
In 2024, adjusted earnings of $9.33 per share missed the consensus estimate of $9.42 but rose 22.9% year over year. Net income attributable to T. Rowe Price was $2.1 billion, up 17.4%.
TROW’s Revenues & Expenses Increase
Net revenues in the fourth quarter increased 11.1% year over year to $1.82 billion. However, the top line missed the Zacks Consensus Estimate of $1.88 billion.
In 2024, net revenues were $7.09 billion, up 9.8% year over year. However, the top line lagged the Zacks Consensus Estimate of $7.16 billion.
Investment advisory fees increased 16.1% year over year to $1.67 billion. Our estimate for investment advisory fees was the same as the actual.
Capital allocation-based income plunged significantly to negative $5.2 million from $40.2 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 $30.6 million.
Total operating expenses increased marginally to $1.26 billion in the reported quarter. Our estimate for the metric was $1.33 billion.
As of Dec. 31, 2024, T. Rowe Price employed 8,158 associates, up 3.2% year over year.
TROW’s AUM Rises, Liquidity Position Strong
As of Dec. 31, 2024, total AUM grew 11.2% year over year to $1.61 trillion. Our projection was $1.71 billion.
In the fourth quarter, net market appreciation and income of $5.9 billion positively impacted TROW’s AUM. However, net cash outflows were $8.2 billion.
The company had substantial liquidity, including cash and cash equivalents of $2.65 billion as of Dec. 31, 2024, up from $2.07 billion as of Dec 31, 2023. This will enable TROW to keep investing.
TROW’s Capital Distribution Activities
The company distributed a total of $355 million to shareholders through common stock dividends and share repurchases in the fourth quarter.