PRICE T ROWE GROUP INC (TROW): what the price requires
At today's price, PRICE T ROWE GROUP INC (TROW) is priced for +1.4% earnings growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/TROW
Headline
| Field | Value |
|---|---|
| Ticker | TROW |
| Company | PRICE T ROWE GROUP INC |
| Sector / Industry | Financial Services / Financial Services |
| Current price | $113.39/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | fee-financial |
| Implied earnings growth | 1.4% |
| Price-to-earnings | 11.9x |
| Earnings yield | 8.4% |
Solve inputs: computed at a 11.8% cost of equity with 4% terminal growth over a 5-year stage, on a 5-year median GAAP earnings base; each 1pp of cost of equity moves the implied earnings growth ~3pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.61σ |
| cohort percentile (of 49 peers) | 10 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.09x | 5 | expensive |
| Earnings | 1.13x | 5 | expensive |
| Relative | 1.06x | 4 | expensive |
| Growth | 0.98x | 4 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.9%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $179.86 | 0.63x | yes | FCF base $1.7B, growth 4% (input: historical growth), terminal g 4.0%, WACC 8.9%, 5yr projection |
| DCF Exit Multiple | Growth | $130.73 | 0.87x | yes | Exit EV/EBITDA: 7.9x / 9.9x / 11.9x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $120.36 | 0.94x | yes | P/E 12x (static sector reference · 2026-04), scenarios: 10.1x / 12.0x / 13.9x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $104.58 | 1.08x | yes | Stage 1: 6% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $104.07 | 1.09x | yes | BV/sh $49.53, ROE (TTM) 19.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $149.18 | 0.76x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $90.83 | 1.25x | yes | Rev $7.4B, growth 4% (input: historical growth; tapered), Terminal P/S: 2.8x / 3.3x / 3.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $111.84 | 1.01x | yes | EPS $9.32, growth 6% (input: historical EPS growth), PEG=2.12 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $116.35 | 0.97x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $2.48B × (1−23%) / WACC 8.9% → EPV (no growth) |
| Residual Income | Asset | $145.46 | 0.78x | yes | BV $49.53 + 5yr PV of (ROE (TTM) 19.4% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $101.91 | 1.11x | yes | √(22.5 × EPS $9.32 × BVPS $49.53) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | $94.19 | 1.20x | yes | FCF $1690.6M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $83.47 | 1.36x | yes | SBC-adj FCF $1.47B (FCF $1.69B − SBC $0.22B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $153.33 | 0.74x | yes | EPS $9.32 × (8.5 + 2×5.6%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $33.74 | 3.36x | yes | BV $49.53 × (ROIC 6.1% / WACC 8.9%) |
| P/Sales Sector | Relative | $102.13 | 1.11x | yes | Revenue $7.41B × sector P/S 3.0x |
| PEG Fair Value | Relative | $77.80 | 1.46x | yes | EPS $9.32 × (PEG 1.5 × growth 5.6% (input: historical EPS growth)) → PE 8.3x |
| Earnings Yield | Earnings | $100.76 | 1.13x | yes | EPS $9.32 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $3.7b |
| Net debt / NOPAT (after-tax) | -2.03x (net cash) |
| Net debt / operating income (pre-tax) | -1.56x (net cash) |
| Share count CAGR (buyback) | -1.4% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- T. Rowe Price manages $1.78 trillion and trades at 12x earnings with a 4.4% dividend yield and a net-cash balance sheet, and every family of valuation method lands within about 20% of the price: this is priced as a steady value stock, not a bet.
- The single number that decides the story is net flows: clients pulled $13.7 billion in the first quarter of 2026 after $56.9 billion of 2025 outflows, and the 10-K concedes that "investment advisors that emphasize passive products have gained and may continue to gain market share from active managers like us".
- Watch the mid-2026 launches from the Goldman Sachs collaboration, the ETF lineup that just passed $25 billion with $2.8 billion of first-quarter inflows, and each quarter's flow number against the outflow trend.
Bull Case
One number decides this stock: net client flows. Every other line item is already excellent, so the verdict swings entirely on whether the outflows that ran $13.7 billion in the first quarter fade toward zero. Here is why the leverage on that single variable is so high: at about 12x earnings, the price implies fee earnings growing just 2.8% a year, a bar the firm's own history clears comfortably. Assets under management ended 2025 at a record, with the 10-K attributing the $169.0 billion increase to "market appreciation, net of distributions not reinvested, of $216.7 billion", meaning markets added roughly four dollars for every dollar clients withdrew. Flows do not need to turn positive for the stock to work; they need to stop being terrible.
Meanwhile the machine generating the earnings is close to financially unimprovable. Net margin runs at 28.3%, return on equity at 19.2%, the balance sheet holds net cash, and trailing free cash flow of $1.69 billion funds a capital-return program of $1.88 billion: a $5.20 annualized dividend yielding 4.4% at a 54% payout ratio, plus $739 million of buybacks that have the share count falling. The quality checklist is nearly perfect, profitable on every measure, cash flow above net income, debt down, no dilution. The March quarter showed operating leverage still works in the right direction, with operating income up 14.1% year over year on 5.3% revenue growth, and management is guiding adjusted expense growth of only 3% to 6% for 2026, consistent with the 10-K's stated plan "to further align our expense growth with our anticipated revenue growth".
The growth options cost the buyer nothing at this multiple. The ETF lineup reached 32 funds with more than $25 billion in assets, eight funds above $1 billion each, and $2.8 billion of net inflows in the first quarter alone, with a European launch in development. The Goldman Sachs strategic collaboration is building co-branded target-date strategies, model portfolios, and an interval fund blending public and private assets, with several launches expected mid-2026. Those vehicles aim the firm's retirement distribution machine at private markets, the one fee pool still expanding. A 12x multiple prices none of that; it prices a firm shrinking 2.8%-growth slow, forever.
Bear Case
Strip away the record assets and the story underneath is that clients keep leaving. They left in 2023, left in 2024, took out $56.9 billion in 2025, and took another $13.7 billion in the first quarter of 2026. The record $1.78 trillion under management is a bull-market artifact, not a demand signal: the firm's own 10-K attributes the increase to market appreciation of $216.7 billion swamping the withdrawals. The filing names the structural cause without flinching: "investment advisors that emphasize passive products have gained and may continue to gain market share from active managers like us", adding, with unusual candor, "we cannot predict how much market share these competitors will gain". That is not a cyclical problem management can fix with execution. It is the industry's business model eroding under a firm that runs it well.
The decay compounds through fees as well as flows. What leaves are high-fee active mutual fund dollars; what arrives are ETF dollars at structurally lower fees, so even the bright spots carry mix compression. Revenue grew 5.3% year over year in the March quarter only because markets did the lifting, and that cuts both ways: an asset manager is a leveraged claim on equity indices, and a bear market would subtract performance and accelerate withdrawals simultaneously, the double hit that made past drawdowns in this stock so deep. The 10-K notes competitors "have greater resources than we do and may offer a broader range" of products, and the giants of passive can price at levels no active shop can follow.
The apparent cheapness is mostly fair pricing. At 12.3x earnings the stock trades at the sector median, in the lower half of its fee-financial peer group, and every valuation family lands within 10% to 20% of the price: there is no neglected-value gap here, just a market correctly charging for melting economics. The dividend is safe at a 54% payout, but safety is not a thesis, and the initiatives that could change the trajectory are small against the base: $25 billion of ETF assets is 1.4% of firm-wide assets, and the Goldman private-markets products launch into a crowded field in mid-2026. Until the flow line inflects, the buyer collects 4.4% a year to watch a franchise get smaller.
Valuation
A capital-light fee business is worth the fee earnings it throws off, and at $118.54 (July 10, 2026) the market pays about 12x those earnings, an 8% earnings yield. Inverting the price says it embeds fee-earnings growth of roughly 2.8% a year, a pace within what the firm has delivered, and the multiple sits in the lower half of the fee-financial peer group. The bet is modest in both directions: the price asks for little, and it offers little unless something changes the flow trajectory.
The methods agree with each other to an unusual degree. Asset-based and earnings-power reads put the price at about 1.2x their central estimates, and peer multiples and growth-based methods at about 1.1x, so all four families cluster within 20% of the quote. There is no durability premium to defend and no deep-value gap to close; the market is pricing a mature franchise roughly at its demonstrated earnings power. The inputs behind that earnings power are disclosed plainly: assets under management of "$1,775.6 billion" at year-end 2025, with the year's increase "driven by market appreciation, net of distributions not reinvested, of $216.7 billion", against which the passive-share concession in the risk factors, that index-oriented competitors "have gained and may continue to gain market share", is the input that keeps the multiple at 12 rather than 15.
The balance sheet removes the downside tail. The company holds net cash, so there is no solvency pressure under any flow scenario, and the trailing year returned $1.88 billion to shareholders: $1.14 billion of dividends at the $5.20 annualized rate, a 4.4% yield consuming 54% of net income, plus $739 million of buybacks shrinking the share count. Free cash flow of $1.69 billion covers the whole program. What the buyer owns at this price is an 8% earnings yield on a shrinking-but-immensely-profitable franchise, with the ETF ramp and the Goldman private-markets launches as unpriced options; what decides whether the multiple ever expands is the quarterly net-flow line, and nothing else on the page moves it.
Catalysts
The mid-2026 product calendar is the most concrete near-term event set. The Goldman Sachs collaboration announced last September is moving from design to launch, with co-branded target-date strategies, model portfolios, and multi-asset offerings incorporating private investments in development and several launches expected mid-2026, including an interval fund and a target-date sister series later in the year. These vehicles point T. Rowe's retirement-plan distribution at private equity, private credit, and infrastructure exposure, and their early asset gathering will be the first evidence of whether the partnership can bend the firm's flow trajectory.
The quarterly flow number remains the standing catalyst. First-quarter net outflows were $13.7 billion, driven by equities and mutual funds, against 2025's full-year outflows of $56.9 billion, so the July earnings report gets read flow-line first. The ETF complex is the offsetting stream to track: 32 funds after two first-quarter launches, more than $25 billion in assets, eight funds above $1 billion, $2.8 billion of net first-quarter inflows, and plans forming for the firm's first European ETFs. On costs, management guided 2026 adjusted operating expense growth of 3% to 6% while funding the launch slate, so the margin holds if revenue keeps pace. The dividend cadence continues in the background, with the payout at 54% of earnings and the annualized rate at $5.20; the next increase announcement is the routine but watched signal that the capital-return machine is undisturbed by the outflows.
Peer Cohorts (Per Segment, With Filing Citations)
Investment management (single segment) (reported)
- APAM (Artisan Partners Asset Management Inc.)
- (no filing in the citation store)
- FHI (Federated Hermes, Inc.)
- (no filing in the citation store)
- AMG (AFFILIATED MANAGERS GROUP, INC.)
- (no filing in the citation store)
- BEN (FRANKLIN RESOURCES, INC.)
- (no filing in the citation store)
- IVZ (Invesco Ltd.)
- (no filing in the citation store)
- JHG (JANUS HENDERSON GROUP PLC)
- (no filing in the citation store)
- VCTR (Victory Capital Holdings, Inc.)
- (no filing in the citation store)
- BLK (BlackRock, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 earnings call, April 2026 · Q1 2026 earnings call, April 30, 2026 · Seeking Alpha, 2026 · company announcements and Q1 2026 call · Q1 2026 earnings call · Q1 2026 earnings call and company announcements, April 2026