T. Rowe Price Group, Inc. (NASDAQ:TROW) operates in the Asset Management segment of the Financial sector. The company has grown sales at a 9.00% annual rate over the past five years, putting it in the medium growth category. TROW has a net profit margin of 32.50% and is more profitable than the average company in the Asset Management industry. In terms of efficiency, TROW has an asset turnover ratio of 1.92. This figure represents the amount of revenue a company generates per dollar of assets. TROW’s financial leverage ratio is 0.33, which indicates that the company’s asset base is primarily funded by equity capital. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is 28.90%, which is better than the Asset Management industry average ROE.
T. Rowe Price Group, Inc. (TROW) pays out an annual dividend of 2.28 per share. At the current valuation, this equates to a dividend yield of 2.43%. The company has a payout ratio of 35.80%. TROW’s current dividend therefore should be sustainable. Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 1.89. All else equal, companies with higher FCF yields are viewed as cheaper. Company trades at a P/E ratio of 15.38, and is more expensive than the average stock in the Asset Management industry. The average investment recommendation for TROW, taken from a group of Wall Street Analysts, is 2.80, or a hold.
Over the past three months, T. Rowe Price Group, Inc. insiders have been net buyers, dumping a net of -240,325 shares. This implies that insiders have been feeling relatively bearish about the outlook for TROW. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. TROW has a beta of 1.31 and therefore an above average level of market volatility.
State Street Corporation (NYSE:STT) operates in the Asset Management segment of the Financial sector. STT has increased sales at a -3.20% CAGR over the past five years, and is considered a low growth stock. The company has a net profit margin of 77.90% and is more profitable than the average Asset Management player. STT’s asset turnover ratio is 0.04 and the company has financial leverage of 10.5. STT’s return on equity of 11.30% is worse than the Asset Management industry average.
State Street Corporation (STT) pays a dividend of 1.68, which translates to dividend yield of 1.80% based on the current price. Stock has a payout ratio of 26.60%. According to this ratio, STT should be able to continue making payouts at these levels. The company trades at a free cash flow yield of 0 and has a P/E of 16.18. Compared to the average company in the 11.66 space, STT is relatively expensive. The average analyst recommendation for STT is 2.60, or a hold.
State Street Corporation insiders have sold a net of -38,444 shares during the past three months, which implies that the company’s top executives have been feeling bearish about the stock’s outlook. Finally, STT’s beta of 1.38 indicates that the stock has an above average level of market risk.
T. Rowe Price Group, Inc. (NASDAQ:TROW) scores higher than State Street Corporation (NYSE:STT) on 9 of the 13 measures compared between the two companies. TROW has the better fundamentals, scoring higher on growth, efficiency, leverage and return metrics. TROW wins on valuation measures.