Investment firm T. Rowe Price Group Inc. said Wednesday that its second-quarter net income rose almost 20 percent but operating expenses rose and assets under management fell during the quarter.
The earnings fell short of analysts’ estimates, and the stock dropped more than 5 percent in afternoon trading.
For the three months ended June 30, the company earned $245.8 million, or 92 cents per share, up from $205.6 million, or 79 cents per share, a year earlier.
Analysts, on average, expected higher earnings of 95 cents per share, according to a FactSet poll.
Revenue rose to $854.3 million from $736.8 million. Wall Street was looking for higher revenue of $855.3 million.
Revenue from investment advisory fees, administrative fees and distribution and servicing fees all rose.
Operating expenses for the Baltimore company increased to $455.5 million from $408.8 million.
T. Rowe boosted its average staff size by 3.5 percent. It had 5,448 employees at quarter’s end. Compensation and related costs climbed mostly on increased salaries and employee benefits and a rise in the interim accrual for year-end bonuses.
Assets under management dropped to $614 billion at the end of the second quarter from $617.4 billion at the end of the first quarter. Market appreciation and income totaling $4.6 billion was offset by $8 billion of net cash outflows. T. Rowe said that the outflows were mostly related to a small number of big institutional and intermediary clients that changed their investment goals or repositioned their allocations.
Shares fell $4.18, or 5.2 percent, to $75.50 in afternoon trading. The stock is still near the upper end of its 52-week range of $58.52 to $80.26.