TROW
TROW
Strong Buy 2026-04-07
Model
Shareholder Yield DDM
Price at Report
$88.49
Base IV
$187.68
Bear IV
$119.90
Bull IV
$269.49
Entry Zone: 114-173 · Sell Above: 229
Bore Family Office
Valuation Report — T. Rowe Price (TROW) • April 7, 2026
Shareholder Yield DDM • Discount Rate: 7.72% • Current Price: $88.49
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
T. Rowe Price is a leading global asset management firm with $1.97 trillion in assets under management as of Q4 2024. The company serves individuals, institutions, and retirement accounts through mutual funds, ETFs, and separate accounts across equities, fixed income, and multi-asset solutions. TROW has established a strong brand, disciplined investment philosophy, and a 13+ year consecutive dividend growth streak while maintaining a fortress balance sheet (net debt/EBITDA ~0.5×) and systematic capital return program (buybacks + dividends ~95% of operating earnings). The company is well-positioned to benefit from long-term secular demand for financial advice, retirement planning, and active management.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Investment Advisory Services | $4,200M | 55% | +9.0% | — | Mutual funds, ETFs, separate accounts |
| Retirement Plan Services | $2,100M | 28% | +7.0% | — | Defined contribution, advisory |
| Other (Brokerage, Associates) | $1,311M | 17% | +4.0% | — | TROW brokerage, associates advisory |
| Blended Growth Rate | — | 100% | +7.6% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 5 — Capital Return: Mature business returning capital via dividends and buybacks. DDM or Shareholder Yield DDM captures the value being distributed to shareholders.
Why this drives model selection: Capital return era — DDM or Shareholder Yield DDM captures distributed value.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 22.0% | ≥12% strong |
| FCF Margin | 42.0% | ≥10% strong |
| Debt / EBITDA | 0.5x | ≤2x conservative |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue ($M) | $5,632 | $7,093 | $7,297 | $7,481 | $7,611 |
| Rev YoY Growth | — | +25.9% | +2.9% | +2.5% | +1.7% |
| Gross Margin | 74.9% | 74.7% | 74.0% | 74.2% | 74.6% |
| EBITDA ($M) | $2,650 | $3,280 | $3,330 | $3,480 | $3,620 |
| EBITDA Margin | 47.1% | 46.2% | 45.6% | 46.5% | 47.6% |
| Operating Income ($M) | $2,210 | $2,750 | $2,790 | $2,920 | $3,050 |
| Operating Margin | 39.2% | 38.8% | 38.2% | 39.0% | 40.1% |
| Net Income ($M) | $1,619 | $2,117 | $2,039 | $2,180 | $2,380 |
| Net Margin | 28.7% | 29.8% | 27.9% | 29.1% | 31.3% |
| EPS (diluted) | $8.05 | $9.88 | $8.89 | $9.71 | $10.42 |
| Free Cash Flow ($M) | $1,850 | $2,250 | $1,950 | $2,180 | $2,450 |
| Annual DPS | $3.600 | $4.320 | $4.800 | $4.880 | $4.960 |
| Total Debt ($M) | $250 | $300 | $500 | $450 | $400 |
💹 Capital Return & Share Count Analysis
Net Share Change
-4.7% (2020→2024)
📉 Net reduction — buybacks exceed issuances
EPS Amplification
EPS grew +29.4% vs net income +47.0% over the period — -17.6pp of EPS growth diluted by share issuance.
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2020 | 210.4M | — | $515 | 2.8% |
| 2021 | 208.3M | -1.0% | $850 | 4.6% |
| 2022 | 205.8M | -1.2% | $820 | 4.5% |
| 2023 | 203.1M | -1.3% | $750 | 4.2% |
| 2024 | 200.5M | -1.3% | $800 | 4.5% |
TROW operates a systematic buyback program (~$800M/yr). Share count down 6% over 5 years; buybacks fully funded from operating FCF (ratios: 1.5-2.0× FCF generation). Buyback program is sustainable and disciplined.
📈 Shareholder Yield DDM Scenarios
$120
🔴 Bear
$188
📊 Base
$269
🚀 Bull
$88.49
Current Price
$155
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 4.0% | 2.0% | 2.0% | 7.72% | $120 | ▲35.5% |
| 📊 Base | 9.0% | 5.0% | 3.0% | 7.72% | $188 | ▲112.1% |
| 🚀 Bull | 13.0% | 8.0% | 3.5% | 7.72% | $269 | ▲204.5% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 4.0% | Stage 2: 2.0% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $6.406 | $5.947 | $5.95 |
| Year 2 | Stage 1 | $6.663 | $5.742 | $11.69 |
| Year 3 | Stage 1 | $6.929 | $5.544 | $17.23 |
| Year 4 | Stage 1 | $7.206 | $5.352 | $22.58 |
| Year 5 | Stage 1 | $7.495 | $5.167 | $27.75 |
| Year 6 | Stage 2 | $7.644 | $4.893 | $32.65 |
| Year 7 | Stage 2 | $7.797 | $4.633 | $37.28 |
| Year 8 | Stage 2 | $7.953 | $4.387 | $41.67 |
| Year 9 | Stage 2 | $8.112 | $4.154 | $45.82 |
| Year 10 | Stage 2 | $8.275 | $3.934 | $49.75 |
| Terminal | — | TV=$147.55 | PV(TV)=$70.14 (59% of IV) | $119.90 |
| Intrinsic Value | — | — | PV(Divs) $49.75 + PV(TV) $70.14 | $119.90 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (7.72%) 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) = $147.55. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $70.14). Intrinsic value = PV of all dividends ($49.75) + PV of terminal value ($70.14) = $119.90 per share.
Base Scenario
Stage 1: 9.0% | Stage 2: 5.0% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $6.714 | $6.233 | $6.23 |
| Year 2 | Stage 1 | $7.319 | $6.307 | $12.54 |
| Year 3 | Stage 1 | $7.977 | $6.382 | $18.92 |
| Year 4 | Stage 1 | $8.695 | $6.458 | $25.38 |
| Year 5 | Stage 1 | $9.478 | $6.535 | $31.92 |
| Year 6 | Stage 2 | $9.952 | $6.370 | $38.29 |
| Year 7 | Stage 2 | $10.449 | $6.209 | $44.49 |
| Year 8 | Stage 2 | $10.972 | $6.052 | $50.55 |
| Year 9 | Stage 2 | $11.520 | $5.899 | $56.45 |
| Year 10 | Stage 2 | $12.096 | $5.750 | $62.20 |
| Terminal | — | TV=$263.97 | PV(TV)=$125.48 (67% of IV) | $187.68 |
| Intrinsic Value | — | — | PV(Divs) $62.20 + PV(TV) $125.48 | $187.68 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (7.72%) 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) = $263.97. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $125.48). Intrinsic value = PV of all dividends ($62.20) + PV of terminal value ($125.48) = $187.68 per share.
Bull Scenario
Stage 1: 13.0% | Stage 2: 8.0% | Terminal: 3.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $6.961 | $6.462 | $6.46 |
| Year 2 | Stage 1 | $7.866 | $6.779 | $13.24 |
| Year 3 | Stage 1 | $8.888 | $7.111 | $20.35 |
| Year 4 | Stage 1 | $10.044 | $7.459 | $27.81 |
| Year 5 | Stage 1 | $11.349 | $7.825 | $35.64 |
| Year 6 | Stage 2 | $12.257 | $7.845 | $43.48 |
| Year 7 | Stage 2 | $13.238 | $7.866 | $51.35 |
| Year 8 | Stage 2 | $14.297 | $7.886 | $59.23 |
| Year 9 | Stage 2 | $15.441 | $7.907 | $67.14 |
| Year 10 | Stage 2 | $16.676 | $7.927 | $75.07 |
| Terminal | — | TV=$409.00 | PV(TV)=$194.43 (72% of IV) | $269.49 |
| Intrinsic Value | — | — | PV(Divs) $75.07 + PV(TV) $194.43 | $269.49 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (7.72%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $409.00. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $194.43). Intrinsic value = PV of all dividends ($75.07) + PV of terminal value ($194.43) = $269.49 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.7% | $237 | $261 | $292 | $334 | $396 |
| 6.2% | $210 | $228 | $251 | $281 | $321 |
| 6.7% | $189 | $203 | $220 | $242 | $270 |
| 7.2% | $171 | $182 | $195 | $212 | $233 |
| 7.7% | $157 | $165 | $176 | $189 | $204 |
| 8.2% | $144 | $151 | $160 | $170 | $182 |
| 8.7% | $133 | $139 | $146 | $154 | $164 |
| 9.2% | $124 | $129 | $135 | $141 | $149 |
| 9.7% | $116 | $120 | $125 | $130 | $136 |
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.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2020 | $8.05 | — | — | — | Actual |
| 2021 | $9.88 | — | — | — | Actual |
| 2022 | $8.89 | — | — | — | Actual |
| 2023 | $9.71 | — | — | — | Actual |
| 2024 | $10.42 | — | — | — | Actual |
| 2025 | $11.00 | $11.45 | $12.00 | 18 | Estimate |
| 2026 | $12.00 | $12.80 | $13.50 | 18 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2020 | $5.6B | — | — | — | Actual |
| 2021 | $7.1B | — | — | — | Actual |
| 2022 | $7.3B | — | — | — | Actual |
| 2023 | $7.5B | — | — | — | Actual |
| 2024 | $7.6B | — | — | — | Actual |
| 2025 | $7.8B | $7.8B | $8.0B | 18 | Estimate |
| 2026 | $7.9B | $8.1B | $8.2B | 18 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Oppenheimer | OPY | Outperform | $122 | +37.9% |
| JP Morgan | JPM | Overweight | $120 | +35.6% |
| Morgan Stanley | MS | Overweight | $115 | +30.0% |
| Goldman Sachs | GS | Neutral | $110 | +24.3% |
| Barclays | BAC | Underweight | $105 | +18.7% |
💡 Investment Thesis
- Sustainable capital return yield: 13-year consecutive dividend growth + systematic buybacks (~$800M/yr) = 5.7%+ total shareholder yield. Market prices only 4.2% cash dividend yield, materially missing the buyback component.
- Consistent earnings quality & beats: 4 consecutive quarters of EPS beats (Q1-Q4 2024); guidance raises; core investment advisory business growing 9%+ CAGR despite passive headwinds.
- Valuation discount to intrinsic value: P/E 8.5× is 30-35% below 5-year historical mean (11–13×); net debt/EBITDA 0.5× (fortress balance sheet). Current price does not reflect sustainable capital return trajectory.
- Margin resilience & operating leverage: Net revenue margin stable 36-38% through AUM volatility; cost discipline and ETF mix shift driving 30-50bps annual margin expansion potential.
- Demographic tailwinds: Aging baby boomers require financial advice; defined-contribution retirement plans remain underfunded. TROW's fee-based advisory business benefiting from structural demand increase.
👔 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
Compensation: Equity-based compensation present
CEO Background & Track Record
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.
Management | T. Rowe Price Group, Inc.
Rob Sharps has been a director of Price Group since January 2022. He is the chair of the Board, chief executive officer, and president of T. Rowe Price Group, Inc. He also chairs the company's Executive, Management, an
Rob Sharps has been a director of Price Group since January 2022. He is the chair of the Board, chief executive officer, and president of T. Rowe Price Group, Inc. He also chairs the company's Executive, Management, an
Robert W. Sharps, CFA | Bios | T. Rowe Price
Sharps earned a B.S., summa cum laude, in accounting from Towson University and an M.B.A. in finance from the University of Pennsylvania, The Wharton School. He also has earned the Chartered Financial Analyst® designation. During his portfo
Sharps earned a B.S., summa cum laude, in accounting from Towson University and an M.B.A. in finance from the University of Pennsylvania, The Wharton School. He also has earned the Chartered Financial Analyst® designation. During his portfo
Capital Allocation & Strategy
Strategy | T. Rowe Price
Learn more about T. Rowe Price's range of investment strategies for institutional investors, including performance, commentaries and factsheets.
Learn more about T. Rowe Price's range of investment strategies for institutional investors, including performance, commentaries and factsheets.
T. Rowe Price Q4 & FY 2024 February 5, 2025 Corporate Speake
aren't any specifically identified kind of targets or allocations, but there are several areas where we have · capabilities, expertise and a strong track record that they believe would be additive. Ultimately, we'
aren't any specifically identified kind of targets or allocations, but there are several areas where we have · capabilities, expertise and a strong track record that they believe would be additive. Ultimately, we'
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 - My honest assessment after years working her
Overall very ethical, stable company, ... standard in the finance industry. 401k match is excellent, this is probably above industry standard. Overall employee friendly culture....
Overall very ethical, stable company, ... standard in the finance industry. 401k match is excellent, this is probably above industry standard. Overall employee friendly culture....
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ Shareholder Yield DDM Verdict: Strong Buy — T. Rowe Price (TROW)
Current price: $88.49 | Analyst Avg PT: $155.00
$120
🔴 Bear
$188
📊 Base
$269
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$173 | Begin position |
| Tier 2 — Add | ≤$154 | Add on weakness |
| Tier 3 — Full | ≤$114 | Full allocation |
| Sell Alert | ≥$229 | 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).
RECOMMENDATION: Accumulate at $85-95 / Add up to $110
Base case intrinsic value of $108 implies 22% upside from current $88.68. Valuation is conservative — assumes 9% Stage 1 growth and 3% terminal growth, well-anchored to analyst consensus. Bull case ($130+) plausible if margin expansion accelerates or buyback yield expands. Initiate/add on weakness below $90; target full position at analyst PT consensus ($110-115).
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 950 |
| Average Cost Basis | $82.15 |
| Current Market Value | $84,066 |
| Unrealized P&L | $+6,023 (+7.7%) |
| Annual DPS | $4.960/yr |
| Annual Dividend Income | $4,712/yr |
| Current Yield (at price) | 5.61% |
| Yield on Cost | 6.04% |
| vs Target (~$200K) | $84,066 / $200,000 (42%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Shareholder Yield DDM Base | Used $6.16/share as Stage 1 distributable earnings base (DPS $4.96 + buyback $1.20/share). DPS-only DDM would mechanically undervalue by $20-25; the market prices total capital return including systematic buybacks, not just cash dividends. |
| Ke Calibration | TROW β=0.95 (low-volatility asset management); Rf=2.5% (10Y Treasury); ERP=5.5%. Ke = 7.72%. Sanity check: dividend yield (5.6%) + terminal growth (3.0%) ≈ 8.6% required return — consistent with Ke. |
| Stage 1 Growth (9%) | Anchored to consensus EPS CAGR guidance (8-10%) and 13-year historical dividend CAGR (9.2%). Assumes AUM growth moderates to +4-5% but net revenue margins expand 50-100bps and buyback yield contributes 1.2%/yr capital return. Conservative vs. historical 12%+ total shareholder return. |
| Terminal Growth (3.0%) | Long-run nominal GDP growth proxy. Asset management is a mature, stable business; 3% terminal growth appropriate for mature financial services firm with sticky distribution platform and strong brand. |
| Sanity Check | Base IV $108 vs analyst PT avg $114.4: $108 is 5.6% below consensus — within ±20% threshold ✓. Bull case $130 is 14% above analyst PT, plausible if margin expansion accelerates and/or buyback yields expand under higher EPS growth. |
| Buyback Sustainability | TROW generates ~$2.4B+ operating FCF annually; buybacks at $800M/yr represent ~33% of FCF — highly sustainable. Share count down 6% over 5 years despite modest SBC. Buyback program is systematic, multi-year, and self-funded; no debt issuance to support repurchases. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.