The Baltimore-based company offers mutual funds, as well as other investment products and services to global clients. It was founded in 1937 and held nearly $1.5 trillion in assets under management (AUM) as of Jan. 31.
AUM slipped 0.4% in January on a month-over-month basis to $1.464 trillion. That may have been mostly due to the market’s dip (-1.1% for the S&P 500) in January and T. Rowe’s net outflow of about $2 billion, according to Wells Fargo, which remains bullish on the stock.
“We think TROW continues to be well positioned to distinguish itself from the peer group in terms of flows, AUM growth, profitability and financial strength,” Wells Fargo said in a Feb. 10 research report. “Despite limited exposure to faster growing areas in asset management and below-average diversification, TROW’s organic growth profile is favorable.”
Wells Fargo maintains an overweight rating and 200 price target on T. Rowe.
Stocks To Watch: Strong Fundamentals
IBD Stock Checkup assigns T. Rowe a 95 Composite Rating, which gives investors a quick way to assess a stock’s key growth traits. That puts it among the top stocks to watch in the 118-stock investment management group, which includes Virtus Investment Partners (VRTS), the stock with the group’s highest Composite Rating.
A 95 Earnings Per Share Rating, part of the overall composite score, is also among the group’s leaders. T. Rowe has a five-year compound earnings growth rate of 19%. Analysts expect EPS to rise 26% this year and 5% the next. Profit growth is forecast to accelerate for a fourth straight quarter.
T. Rowe pays a 2.5% annual dividend, above the S&P 500’s average payout of 1.5%. That puts it among IBD’s best dividend stocks. In fact, the firm is an S&P 500 Dividend Aristocrat, a label for companies that have increased their dividend for at least 25 years in a row. T. Rowe last month raised its payout for the 34th consecutive year.
Is T. Rowe Price A Buy?
On the technical front, a 60 Relative Strength Rating means T. Rowe is lagging 40% of all other stocks. But its relative strength line, which compares a stock’s performance to the S&P 500, is at its highest level since June 2018. That’s a bullish sign. Shares rose 24% last year vs. and are up 13% so far this year, well ahead of the S&P 500’s 16% and 3% returns for those periods.
A C+ Accumulation/Distribution Rating points to slightly more recent net buying vs. selling by mutual funds. The number of funds shareholders has risen for eight straight quarters.
T. Rowe has also found support along its 50-day moving average the past four months. It completed a three-weeks-tight pattern last week with a 167.67 buy point, which it cleared this week, according to MarketSmith chart analysis. The buy range tops out at 176.05.
But keep in mind — with the market uptrend under pressure, all purchases are riskier now. One positive aspect for T. Rowe is the strength in financials. The S&P Financial sector made new highs Wednesday.
Follow Nancy Gondo on Twitter at @IBD_NGondo
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