Does the Recent 10% Share Price Drop Signal Opportunity for T. Rowe Price Group in 2025?

• Curious about whether T. Rowe Price Group is a bargain or overpriced right now? You are not alone; it is a common question for anyone looking to spot value in financial stocks.
• In the last week, the stock slipped 3.1%, and it is down 10.3% year-to-date, showing that investors may be rethinking its prospects or repositioning amid shifting market conditions.
• News around recent regulatory shifts in asset management and industry-wide fee pressures have kept T. Rowe Price Group in the spotlight. At the same time, increased competition and evolving investor preferences have driven a steady flow of headlines and analysis.
• When we crunch the numbers, T. Rowe Price Group earns a 5/6 valuation score, meaning it is undervalued across most of our major checks. Let us take a closer look at the approaches behind that score. Stick around, because we will reveal a smarter way to evaluate valuation at the end.

Find out why T. Rowe Price Group's -5.0% return over the last year is lagging behind its peers.

Approach 1: T. Rowe Price Group Excess Returns Analysis

The Excess Returns model estimates a stock's intrinsic value by evaluating how much profit the company generates above its cost of equity. This approach focuses on the returns from reinvesting earnings, accounting for both profitability and growth, rather than just the company's assets or cash flows.

For T. Rowe Price Group, some key metrics stand out:

• Book Value: $49.45 per share
• Stable EPS: $9.47 per share
  (Source: Weighted future Return on Equity estimates from 5 analysts.)
• Cost of Equity: $4.07 per share
• Excess Return: $5.40 per share
• Average Return on Equity: 18.77%
• Stable Book Value: $50.48 per share
  (Source: Weighted future Book Value estimates from 3 analysts.)

Using this method, the estimated intrinsic value of T. Rowe Price Group is $158.82 per share. With the current price about 36% below this estimate, the stock appears solidly undervalued based on its ability to generate consistent, above-average returns on equity. This suggests the market has not fully recognized the company's profitability and future earnings potential.

Result: UNDERVALUED

Our Excess Returns analysis suggests T. Rowe Price Group is undervalued by 36.0%. Track this in your watchlist or portfolio, or discover 842 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for T. Rowe Price Group.

Approach 2: T. Rowe Price Group Price vs Earnings

The Price-to-Earnings (PE) ratio is often considered the gold standard for valuing profitable companies like T. Rowe Price Group. It provides a clear snapshot of how much investors are willing to pay for each dollar of earnings, which makes it a quick way to compare value across companies with stable profits.

What is a “normal” or “fair” PE ratio? That depends on expectations for future growth and perceived risks. Companies with higher expected earnings growth or lower risk typically trade at higher multiples, while more mature or riskier companies trade at lower ones.

Right now, T. Rowe Price Group's PE ratio is 10.9x. That is less than half the Capital Markets industry average of 24.3x and sits well below the average for its listed peers, which is 64.3x. This discount might initially look attractive, but context matters.

Simply Wall St uses the proprietary "Fair Ratio," which is a comprehensive metric that considers the company’s actual growth rate, risk profile, profit margin, size, and more. Unlike simply comparing against peers or industry averages, which may not match T. Rowe Price Group’s unique situation, the Fair Ratio provides a more tailored and accurate benchmark. For T. Rowe Price Group, the Fair Ratio is 15.6x, higher than the current PE ratio.

This suggests the stock is undervalued on this measure, since the current PE ratio is materially below where it would be given the company’s fundamentals and potential.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1411 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your T. Rowe Price Group Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a powerful, intuitive tool available right on the Simply Wall St Community page used by millions of investors. A Narrative is a story you create that connects your view of the company’s future with specific financial forecasts and your estimate of fair value, turning dry numbers like projected revenue, earnings, and margins into a living investment thesis you can update any time.

Narratives let you clearly see how your assumptions about growth, risks, and industry trends translate to what you believe the stock is worth. Crucially, you can compare your fair value against the current price to guide your decision. They are easy to use, accessible to everyone, and automatically refresh as new information arrives, so your investment reasoning always stays relevant, whether a surprise earnings report or new regulatory move hits the headlines.

For example, among the T. Rowe Price Group Narratives, one investor may be optimistic, forecasting robust growth and targeting a fair value of $116.00 per share, while another takes a more conservative stance, estimating only modest gains and setting their fair value at $91.00. Both views are seamlessly compared and visible, empowering you to make decisions with clarity and confidence.

Do you think there's more to the story for T. Rowe Price Group? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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