T. Rowe Price Earnings: Keeps the Profitability Streak Alive

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S&P 500 (NYSE:SPY) component T. Rowe Price Group Inc. (NASDAQ:TROW) reported its results for the second quarter. T. Rowe Price, a financial services holding company, provides investment advisory services to individual and institutional investors in the sponsored mutual funds and other investment portfolios.

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T. Rowe Price Group Inc. Earnings Cheat Sheet

Results: Net income for T. Rowe Price Group Inc. rose to $206.8 million (79 cents per share) vs. $204.7 million (76 cents per share) in the same quarter a year earlier. This marks a rise of 1% from the year-earlier quarter.

Revenue: Rose 2.4% to $736.8 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: T. Rowe Price Group Inc. fell short of the mean analyst estimate of 80 cents per share. It fell short of the average revenue estimate of $760.4 million.

Quoting Management: James A.C. Kennedy, the company’s chief executive officer and president, commented, “Early in 2012, evidence supported the view that the U.S. economy was beginning to gain self-sustaining momentum, the Chinese economic slow down would likely be limited, and the European debt crisis was starting to be addressed. In contrast, more recent news has called all three of these trends into question. There is now rising concern about how long it might take to decide upon and implement a long-term solution in Europe. There is also considerable doubt about the willingness of politicians on this side of the Atlantic to rise above politics, especially in an election year, to make the decisions needed to address U.S. fiscal issues. The renewed political and economic uncertainties have led to another round of retrenchment by consumers and corporations around the globe, as well as by investors.”

Key Stats:

For two quarters in a row, the company has come in under analyst estimates. In the first quarter, it missed expectations by 2 cents with net income of 75 cents versus a mean estimate of net income of 77 cents per share.

Net income has increased 7.9% year-over-year on average across the last five quarters. The biggest gain came in the second quarter of the last fiscal year, when income climbed 29.1% from the year-earlier quarter.

Revenue rose last quarter after dropping in the previous quarter. Revenue fell 46.4% to $733.8 million in the first quarter from the year earlier.

Looking Forward: Over the past ninety days, the average estimate for the third quarter has fallen from 88 cents per share to 84 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. For the fiscal year, the average estimate has moved down from $3.39 a share to $3.27 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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