T Rowe Price Group Stockanalysis

Today and as my first article I will further highlight a stock that I already discussed on my Instagram. T. Rowe Price Group Inc. (Ticker TROW) (written 12th February)


Introduction

The in the U.S. based global investment management organization has currently around 1.46 Trillion USD assets under management. They offer a range of mutual funds, advisory services, retirement plans and other financial services.

According to their website their mission is “simple”: “Help clients around the world achieve their long-term investment goals”

The question I am asking myself is whether this statement is only referring to the investments in their mutual funds or if an investment in the company itself could also help me achieving my investment goals.


Business

TROW's 2019 revenue was composed as follows:

Sales per Business


















Sales per region

















Source: https://www.marketscreener.com/



Growth

The Growth metrics are looking promising:

5Y. Average Revenue Growth (YoY): 7,3%

5Y. Average EBITDA Growth (YoY): 6,3%

5Y. Average EBIT Growth (YoY): 6%

5Y. Average Diluted EPS Growth (YoY): 13,6%

Margin: The operating margin is stable at around 45%.


Source: https://www.marketscreener.com/


Dividend

Current Yield (12th February): 2,65%

Payout Ratio: 36,26%

5Y. Average Growth Rate: 11,7%

Dividend Growth for 35 Years

Average Dividend Yield last 10Y: 2,8%


Debt

For me to verify that the company isn’t taking too much debt, I like to see that the debt is smaller than 4 times EBIT. For TROW this means: DEBT < 4 x EBIT 0 USD << 2,75 Bn. USD



Valuation

The average Dividend Yield for the last 10 Years was around 2,8%. Given that, the fair price for TROW, only look at the dividend would be around 154 USD.

On the Earnings side, we got an average PE of 16,5 the last 10 years. Right now, the stock price is hovering at pretty much that PE, which indicates fair value. Are we now looking at the Earnings Estimates for 2023 and also factor in the average PE of about 16,5 we get a Target Stock Price of 218 USD. This would mean about 33% upside potential until 2023 without considering dividends.


CONCLUSION

Wallstreetbets and Covid19 all have been big catalysators that brought plenty attention to investing and stocks. If I look at my friends and family, I’m noticing a lot of new investors are coming to wall street. Most of younger investors or newbie investors will seek guidance through such investment firms as T. Rowe Price Group or even better will buy their funds. Therefore, I’m pretty bullish on the whole investment sector. In my opinion stocks like Blackrock or TROW can highly capitalize from this trend. With that in mind and all the great aspects mentioned above I personally will BUY T. Rowe Price Group.

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