T. Rowe Price third quarter profit up 28 percent

Posted: 11:43 am Fri, October 22, 2010
By Ben Mook
Daily Record Business Writer

For T. Rowe Price Group, it’s more of the same. And that’s a good thing.

“They just keep doing the right things, chugging away, consistently generating stable growth and profitability,” said Greggory Warren, an equity analyst at Morningstar Inc. in Chicago.

The Baltimore-based money management firm on Friday reported solid growth in profits and assets under management for the third quarter of 2010. Price said it had net income of $169 million, or 64 cents per share, for the quarter, a 28 percent increase from the third quarter of 2009, when it was 50 cents per share. Analysts polled by Thomson Reuters most recently forecast earnings of 60 cents a share on revenue of $575 million.

For the quarter, T. Rowe Price saw $8 billion in net inflows from investors, an increase from $7.4 billion in the third quarter of 2009 and $5.1 billion in the second quarter of this year.

“They ended up doing better than we were looking for,” Daniel T. Fannon, an analyst with Jefferies & Co. said. “The magnitude of their inflows was a positive surprise.”

Assets under management were up 20 percent for the quarter to $439 billion, compared to $391 billion at the end of June.

Price reported revenue for the quarter of $586 million compared to $498 million in the third quarter of 2009.

“With the tailwind of market gains and net new client inflows, our net revenues, net income, and earnings have largely recovered from the crisis, although they still remain slightly below their peak in the fourth quarter of 2007,” T. Rowe Price President and CEO James A.C. Kennedy said in a statement.

Kennedy said hiring continued in the quarter, up about 2.5 percent from this time last year. He said T. Rowe now has 4,975 employees, compared to 4,800 at the end of 2009.

“Our sense is the retail investors are coming back, so we’re increasing that staff,” Kennedy said in an interview.

Kennedy said the company also did some hiring on the information technology front as well.

He said T. Rowe continued to see an increase in the number of investors coming from outside the U.S.

“We had no clients domiciled outside the U.S. in 2000, now it’s up to 12 percent,” Kennedy said. “It’s been steady growth over the years.”

Shares of T. Rowe Price gained $2.19, or 4.16 percent, Friday to close at $54.89 on Nasdaq.