What Recent Market Lows Mean for T. Rowe Price Group’s Valuation in 2025

Thinking about what to do with T. Rowe Price Group stock? Whether you already hold shares or are considering this seasoned investment manager for the first time, it pays to pause and dig beneath the surface numbers. The past year has seen small dips and post-pandemic recalibration, with the stock slipping 0.7% over the last twelve months and 5.4% in the past month alone. Looking further back, there is respectable growth: a 13.2% gain over the past three years. This comes despite some recent turbulence and the occasional challenge from changing investor sentiment as broader markets weigh the impact of shifting interest rates and sector rotations.

What might grab your attention next is the company’s current value score, which stands at an impressive 5 out of 6. This means T. Rowe Price Group appears undervalued on five separate valuation checks, potentially signaling opportunity for investors interested in buying quality assets at a discount. While price movements can sometimes reflect market noise, there are also real shifts in risk perception as fund flows react to the evolving macro landscape.

This sets the stage for a closer look at how valuation is being assessed. Up next is a breakdown of the main approaches analysts use to determine what this stock is truly worth, and why there may be a more insightful method to consider at the end of our exploration.

Why T. Rowe Price Group is lagging behind its peers

Approach 1: T. Rowe Price Group Excess Returns Analysis

The Excess Returns valuation method emphasizes how efficiently a company generates profits relative to the cost of its equity, which is the benchmark return required by shareholders. For T. Rowe Price Group, this model calculates the firm’s economic profits above and beyond what investors might expect from a comparable risk investment. This approach provides a sharper picture of value than earnings alone.

Looking at the latest data, T. Rowe Price Group reports a Book Value of $48.02 per share and a Stable Earnings Per Share (EPS) of $9.24, as determined by the consensus of five analysts. The company’s Cost of Equity stands at $3.93 per share, and the average Return on Equity is a robust 19.00%. This translates to an Excess Return of $5.31 per share, which indicates the business is creating value well above its capital costs. The model also relies on a stable Book Value of $48.63 per share, estimated by two analysts.

Based on these inputs, the Excess Returns model estimates an intrinsic value of $154.84 per share, making the stock roughly 33.2% undervalued compared to current market prices. In summary, T. Rowe Price Group stands out with consistently strong returns on invested capital and a significant margin of safety according to this valuation signal.

Result: UNDERVALUED

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.

Our Excess Returns analysis suggests T. Rowe Price Group is undervalued by 33.2%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: T. Rowe Price Group Price vs Earnings

The Price-to-Earnings (PE) ratio is widely used for valuing profitable companies because it directly compares a stock’s price with its earnings power. This makes it especially suitable for established firms like T. Rowe Price Group, where consistent profits provide meaningful insights into how investors are valuing each dollar of earnings generated.

While a “normal” or “fair” PE ratio varies by company and circumstance, growth prospects and risk profile play a key role in setting expectations. Faster-growing or lower-risk businesses usually command higher PE multiples, while companies facing limited growth or greater uncertainty will see lower ratios justified. These nuances mean that context is essential when comparing PE ratios between companies and industries.

Currently, T. Rowe Price Group trades at a PE ratio of 11.4x. That stands well below both the Capital Markets industry average of 27.2x and the peer average of 22.7x. However, simply benchmarking against these raw numbers can miss important details. This is where Simply Wall St’s “Fair Ratio” comes in, offering a tailored benchmark of 15.3x for TROW by factoring in not just industry data but also company-specific traits like earnings growth, profit margins, market cap, and risk profile. This Fair Ratio approach offers a more realistic sense of what investors should pay for TROW’s earnings, making it a step ahead of generic comparisons.

With the current PE of 11.4x sitting comfortably below the Fair Ratio of 15.3x, the numbers suggest T. Rowe Price Group is modestly undervalued on this basis.

Result: UNDERVALUED

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

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

Earlier, we mentioned there is a more insightful way to understand valuation, so let’s introduce Narratives. A Narrative is your personal investment story for a company. It goes beyond the raw numbers to explain why you believe in a certain fair value, based on your assumptions around future revenues, earnings, and profit margins.

Narratives connect your perspective on T. Rowe Price Group’s business outlook and catalysts directly to a clear financial forecast, and then to an estimated fair value. This turns the process of investing into more than just analyzing ratios, by grounding your conviction in a structured forecast that adapts as your view changes.

On Simply Wall St’s Community page, millions of investors are using Narratives to capture their viewpoints, adjust assumptions, and compare with other users. All of this is available in an accessible format with one click. Narratives help clarify when to buy or sell, as you can easily weigh your Fair Value versus the market’s current price in real time.

The best part is that Narratives always stay up-to-date with the latest news, earnings, or market developments. For example, T. Rowe Price Group’s most optimistic Narrative targets a fair value of $116, citing growth from retirement solutions and global ETFs, while the most cautious sees just $91 due to concerns about passive flows and competitive pressures. Each investor crafts a story that fits their understanding of the business.

Do you think there's more to the story for T. Rowe Price Group? Create your own Narrative to let the Community know!

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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