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T. Rowe Price Group, Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

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·4 min read
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Last week saw the newest full-year earnings release from T. Rowe Price Group, Inc. (NASDAQ:TROW), an important milestone in the company's journey to build a stronger business. T. Rowe Price Group reported US$6.2b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$9.98 beat expectations, being 5.1% higher than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on T. Rowe Price Group after the latest results.

See our latest analysis for T. Rowe Price Group

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Taking into account the latest results, the consensus forecast from T. Rowe Price Group's twelve analysts is for revenues of US$7.30b in 2021, which would reflect a notable 18% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to expand 19% to US$12.03. In the lead-up to this report, the analysts had been modelling revenues of US$7.22b and earnings per share (EPS) of US$11.74 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of US$172, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values T. Rowe Price Group at US$200 per share, while the most bearish prices it at US$145. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the T. Rowe Price Group's past performance and to peers in the same industry. It's clear from the latest estimates that T. Rowe Price Group's rate of growth is expected to accelerate meaningfully, with the forecast 18% revenue growth noticeably faster than its historical growth of 8.3%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.6% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect T. Rowe Price Group to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around T. Rowe Price Group's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for T. Rowe Price Group going out to 2023, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for T. Rowe Price Group that you need to take into consideration.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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