T. Rowe Price Group Reports Q1 Results Up From Last Year
April 25--T. Rowe Price Group Inc. reported a profit of $385.9 million in the first three months of the year, up 27 percent from the January-through-March period last year.
Earnings per share rose 36 cents to $1.54, compared to the first quarter of 2016. Backing out non-recurring gains, per-share earnings were $1.18, falling short of analyst estimates.
Eight analysts polled by Zacks Investment Research estimated earnings of $1.20 a share.
T. Rowe Price reported revenue of $1.1 billion, up 12 percent from $994.1 million the same period last year.
"I think it was a solid quarter for returns," said William J. Stromberg, the company's president and CEO. "We're pleased with our investment performance and pleased with the progress we're making on a number of strategic initiatives."
Late Tuesday morning T. Rowe's stock was trading at $69.50 a share, down 4.31 percent.
The results include a $50 million insurance recovery related to the firm's decision to compensate some investors for a botched vote on Dell Inc.'s sale.
The firm had vocally opposed the deal in 2013 but inadvertently backed it, preventing T. Rowe investors from joining others in suing Dell for a higher price. Last year, T. Rowe said it would pay out $166 million into affected funds to make up for the mistake.
Excluding the insurance recovery, operating expenses rose 10 percent, to $641.9 million from the same period in 2015.
Because markets have been strong, T. Rowe said it plans to spend more to accelerate spending on strategic initiatives, such as creating new investment products, expanding distribution capabilities and using technology to improve client experience.
Such initiatives are aimed at diversifying business outside the United States, Stromberg said, as investors in U.S. equity markets continue to pull money from actively managed funds in favor of passive investments.
The trend, one affecting nearly all money managers, was "less of an issue this quarter than last," Stromberg said.
"We feel strong about our competitiveness," Stromberg said, "but are also working to diversify."
Investment advisory fees rose almost 14 percent, to $991.1 million.
T. Rowe had $861.6 billion in assets under management at the end of March.
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