Summary

• T. Rowe Price Group Inc. is one of the leaders in the Asset Management industry and the 29th largest asset manager in the world.
• The company is distinguished among its peers by excellent fundamentals (it has everything that you as an investor are looking for).
• In comparison to its rivals, T. Rowe Price Group was hit much less than its peers during the last financial crisis.
• Despite future challenges to growth, T. Rowe Price Group is able to sustain its current performance by utilizing new strategies, while sticking to the old virtues.

Business Overview :

T. Rowe Price Group Inc. (NASDAQ:TROW ) is a publicly owned asset management company, founded by Thomas Rowe Price Jr. in 1937. Today it is the 29th largest asset management firm in the world, which controls $731.2B of assets under management (AUM). T. Rowe Price Group consolidates its net income primarily from its investment advisory services that are provided to both individual and institutional clients/investors. The investment advisory business is operated through four major subsidiaries: T. Rowe Price Associates, T. Rowe Price International, T. Rowe Price Stable Asset Management and T. Rowe Price Global Investment Services. The company accumulates the assets under management from a diversified client base. T. Rowe Price Group Inc. also manages a broad range of American, Asian, European and other international mutual funds. These, along with other investment portfolios are designed to meet different and constantly changing demands of clients. New funds are regularly introduced to deal with the fast changing environment and to outperform the competitors.

There are three major sources of income for the T. Rowe Price Group Inc. Investment Advisory Fees, Administrative Fees and Other Income. Since a large amount of income comes from fees, the firm is heavily dependent on its client base. When it comes to the mutual funds, a large proportion of income comes from investing in stocks. Bonds and money markets attribute a smaller share of the revenues. The one visible advantage is the low operating costs for the company’s funds, which have a lower expense ratios than its peers, according to Lipper .

(Source: Capital IQ database)

T. Rowe Price Group Inc. has employed its business model for more than 70 years and has done so quite successfully. The company has a clear vision of the future and has always followed its core principles.

Financial Statements

T. Rowe Price Group Inc. is a golden egg for investors searching for a stock with good dividends and long-term potential for growth. After carefully analyzing its 5-10 years performance using the Capital IQ database, we can see that the company demonstrates excellent financial health. From the fundamental point of view, T. Rowe Price Group managed to please investors with relatively slow but persistent year-on-year growth in gross profits and net income since early 2000. Cash flow from operating activities has also constantly been growing, meaning the firm is doing well in its core business — advisory services and wealth management. Cash flows from investing and financing activities are somewhat hazardous. This is due to investment expenditures and returning cash to shareholders (there have been recent buybacks from top managers, according to Bloomberg ). A large part of the company’s income comes from the US market, however it is still working on expanding its worldwide presence, as outlined by The Wall Street Journal . One of the most important features to look at is the dividends and earnings per share; T. Rowe Price Group proudly demonstrates persistent growth in both over the last 10 years (save the drop in 2008/2009). Definitely a green flag in my book when selecting a long-term investment.