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T Rowe Price Abstract

In: Business and Management

Submitted By Jay12quigley
Words 640
Pages 3
T. Rowe Price Group, Inc.

Company:
T. Rowe Price Group, Inc.
Ticker:
TROW
Sector:
Financials
Industry: Asset Management

Investment Thesis­ There are several positive factors to consider when evaluating T. Rowe
Price. First, they offer a durable service that will always be needed. As long as there is money in the economy and consumers have income, people will need to manage these assets and invest them. Next, they pay a dividend of 2.73%. In addition, they have ROA, ROI, and ROE ratios all over 20% and above industry standards. Furthermore, they have a profit margin of 30% and an operating margin of 45%, also good by industry standards. Finally, they currently possess no debt on their books. Some may see this as an issue because they would argue they aren’t trying to grow. However, this is a very mature company and not much physical expansion is needed for them to operate over a large area so debt isn’t really an issue.

Overview­ T. Rowe Price Group, Inc. is an investment firm offering its customers mutual funds, subadvisory services, and account management. These accounts are used for individuals, retirement plans, institutions, and financial intermediaries. Furthermore, the company offers investment planning and guidance tools to its clients. T. Rowe Price’s three main practices which they believe sets them apart from its competition are active portfolio management, objective guidance, and low fees for trading. They currently employ about 5,000 people and roughly 90% of their clients are investors from the United States. The company was founded in 1937 by
Thomas Rowe Price Jr. and is headquartered in Baltimore, Maryland.

Catalysts­ Being that T. Rowe Price is a company in the financial sector, one of the main catalysts for strength is a strong economy. The stronger the economy is, the more confidence the public will have in individual companies which leads to more investing in them. The more investing the population does, the more trading fees T. Rowe Price collects from its customers.
With this in mind, consumer sentiment and GDP have both been on the rise over the last few years in the United States, both of which are very good signs for the financial sector.

Risk Analysis­
There are two main risks that T. Rowe Price faces. First, a weak economy could greatly impact their revenues. As mentioned earlier, just as a strong economy helps the company, a weak economy would greatly hurt them. When the public loses faith in the economy and large corporations, they tend to make fewer trades and overall invest less money. This lack of trading and investing reduces T. Rowe Price’s bottom line. Second, if competitors come in and offer better service/web interface or do it for a cheaper price, customers may be inclined to switch

services. Some of T. Rowe Price’s most well­known competitors are BlackRock, BNY Mellon,
Ameriprise, Franklin Resources, and Northern Trust. As mentioned, if any of these companies are able to take some of T/ Rowe Price’s clients, it will have a large, negative impact on the company, thus posing a real risk to them.

Green Initiatives­ T. Rowe Price has several initiatives they have developed in order to more sustainable. First, they are working to incorporate energy conservation in their office buildings and technology centers. Second, they reuse and recycle at all their company’s buildings. Next, they work to conserve water within their buildings through monitoring their water levels, using low­flow water fixtures, and sourcing plant species that demand less water. Furthermore, they strive to only work with other businesses which share the same values and views about environmental impact. Lastly, they provide employees with a healthy workspace by monitoring indoor air quality and maximizing access to natural sunlight.
Link to environmental policy in its entirety: http://corporate.troweprice.com/ccw/home/responsibility/conductingBusinessResponsibly/enviro nmentalPolicy.do

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