T. Rowe Price rides wave of investor confidence Latest quarter saw more record earnings

October 30, 1993|By David Conn | David Conn,Staff Writer

T. Rowe Price Associates Inc., profiting from apparently inexhaustible investor confidence in the stock market, reported yesterday another quarter of record earnings and revenues.

The company, which manages almost $50 billion in mutual fund assets and private investments, said its third-quarter earnings grew 17 percent to $12 million, or 78 cents a share, from $10.3 million, or 68 cents a share, in the third quarter of 1992.

Revenues were up 27 percent to $78.8 million in the latest period, compared with $62.2 million a year ago. The quarterly earnings surpassed most analysts' expectations, and the company's stock gained $1.25 a share yesterday to close at $59.

Fees earned on record assets under management continued to be the primary contributor to the company's strong revenue growth," President George J. Collins said in a statement. "The international arena has been particularly good for us, having accelerated as the year has progressed."

In fact, while overall assets under management rose 20.5 percent since the first of the year, assets in T. Rowe Price's international funds rocketed 63 percent to $12.1 billion. Almost half of those assets are managed overseas by Rowe Price-Fleming International (RPFI), the company's 50 percent-owned subsidiary.

"I happen to think that this is a new big area for the mutual funds," said analyst Steven Eisman of Oppenheimer & Co. "The margins [for the fund managers] are bigger."

The company's entire family of mutual funds, which held $31.8 billion on Sept. 30, attracted $1.1 billion during the quarter, compared with $1.5 billion for the entire first half of the year.

"It doesn't seem to be slowing down here," said Richard S. Goleniewski, an analyst at Goldman Sachs. "They've got a good mix of products for this environment: primarily equity, with a good chunk of international funds."

T. Rowe's earnings suffered slightly during the period because of a rise in federal taxes, and because it sold for a loss its entire remaining interest in the receivables of Mortgage and Realty Trust, a California real estate investment trust that defaulted on its debt in 1990. The MRT default ended up giving T. Rowe a previously announced $112,000 loss during the quarter.

Also previously announced was a proposed 2-for-1 stock split, and an increase in the amount of outstanding shares to 48 million from 25 million. Shareholders are scheduled to meet Nov. 10 to vote on these proposals. The split, if approved, would take effect Nov. 30 for shareholders of record on Nov. 10.

T. Rowe Price ...... Ticker ..... Yesterday's

Associates Inc. .... Symbol ...... Cls.Chg.

..... .... .... .... TROW ........ 59+1 1/4

Period ended

Sept. 30, 1993 ..... 3rd qtr. ..... Year ago .... Chg.

Revenue ...... ..... $78,765 ...... $62,189 ..... +26.7%

Net Income ... ..... $12,038 ...... $10,309 ..... +16.8%

Primary EPS .. ....... $0.78 ........ $0.68 ..... +14.7%

...... ....... ..... 9 mos. ....... Year ago ..... Chg.

Revenue ...... ..... $220,160 ..... $179,747 ..... +22.5%

Net Income ... ...... $34,125 ...... $26,138 ..... +30.6%

Primary EPS .. ........ $2.21 ........ $1.73 ..... +27.7%

Figures in thousands (except per share data.)

By dialing Sunfax at (410) 332-6123 and entering the code 5605, readers can receive, by fax, a free copy of T. Rowe Price's third quarter earnings report.

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