Tuesday, September 9, 2014

T Rowe Price (TROW) 2014 Review

T. Rowe Price Group Inc. provides investment advisory and administrative services to an assortment of no load funds, sponsored investment products and private accounts.  The company has generated an 18-20%+ return on equity and a 15% growth rate in earnings and dividends over the 10 years.  While TROW is impacted by serious declines in Market prices but it has established a superior long growth record in profits and dividends which we expected to continue:

(1) the excellent track record of its funds as well as recent investor optimism has increased the value of current assets under management as well as attracting new customers,

(2) the introduction of new products such as country funds,

(3) an aggressive cost cutting program,

(4) stock buy backs.

Negatives:

(1)   any decline in stock prices will impact assets under management,

(2)   increasing volatile markets,

(3)   more government regulation,

(4)   a highly competitive industry,

(5)   rising operating costs.

TROW is rated A+ by Value Line, has no debt and its stock yields 2.4%.

Statistical Summary

                  Stock      Dividend         Payout      # Increases   
                  Yield      Growth Rate     Ratio       Since 2004

TROW        2.4%           9%              37%             9
Ind Ave       2.1              9               29               NA  

                Debt/                       EPS Down       Net        Value Line
              Equity         ROE      Since 2004      Margin       Rating

TROW       0%            23%            2                 32%            A+
Ind Ave      33             19              NA               18              NA

     Chart

            Note: TROW stock made great progress off its March 2009 low, surpassing the downtrend off its September 2008 high (straight red line) and the November 2008 trading high (green line).  Long term, the stock is in an uptrend (blue lines).  Intermediate term, it recently broke an uptrend and re-set to a trading range (purple line).  The wiggly red line is the 50 day moving average.  The Dividend Growth and High Yield Portfolios own 50% positions in TROW.  The upper boundary of its Buy Value Range is $53; the lower boundary of its Sell Half range is $133.   




9/14

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