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.

Our View on TROW

TROW’s solid AUM balance, broadening distribution reach and efforts to diversify business through acquisitions are likely to support top-line growth. Solid liquidity aids sustainable capital distributions. However, an elevated expense base and excessive reliance on investment advisory fees are concerns.

Currently, TROW carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Asset Managers

Lazard Inc.’s LAZ fourth-quarter 2024 adjusted earnings per share of 78 cents topped the Zacks Consensus Estimate of 51 cents. The figure compared favorably with earnings of 66 cents in the year-ago quarter.

Lazard’s results were positively impacted by increases in revenues in the financial advisory, asset management and Corporate segments. A decline in expenses was another positive. However, a lower AUM balance acted as a spoilsport.

Invesco’s IVZ fourth-quarter 2024 adjusted earnings of 52 cents per share surpassed the Zacks Consensus Estimate of 49 cents. Moreover, the bottom line increased 10.6% from the prior-year quarter.

IVZ’s results were primarily aided by a decline in adjusted expenses and higher adjusted net revenues. An increase in the AUM balance on decent inflows was a positive too.

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