T. Rowe Price Group, Inc. (NASDAQ:TROW) is an active investment manager that earns most of its revenue from management fees, which naturally ebb and flow with the markets. Its product lineup is broad, stretching across mutual funds, retirement accounts, ETFs, and alternative investments.
What sets T. Rowe apart is its long track record, in-house research, and the sort of client relationships that take years to build, especially in retirement investing. These strengths support steady client retention and recurring fees. But the environment isn’t what it used to be. Competition from low-fee passive funds keeps mounting, and no asset manager is immune to losing clients when performance lags.
That’s what makes the company’s current position so interesting for investors. TROW’s history and brand are assets in their own right, but the key test ahead is whether it can hang onto client money and continue to attract new business as the competitive landscape evolves.
Also read: T. Rowe Price Bets on Fixed-Income ETFs With F/m Investments Deal
Earnings Growth Has Yet to Tell a Consistent Story
T. Rowe Price Group, Inc.’s recent numbers capture this tension. In 2025, revenue edged up 3% to $7.3 billion. Full-year diluted earnings per share landed at $9.24; adjusted EPS was a bit higher at $9.72. However, the second quarter of 2026 brought some bright spots. Revenue jumped 11% year-over-year to $1.91 billion, and adjusted EPS climbed nearly 15% to $2.57. Assets under management reached an all-time high of $1.89 trillion. But not all the news was positive: the firm saw $6.5 billion in net client outflows and faced higher costs, which took some shine off the headline numbers. TROW is a solid dividend company with 40 consecutive years of dividend growth and nearly a 5% dividend yield. Also, the #3 stock on our high-yield dividend growth stocks list has a dividend yield of over 6% and trades at an even lower forward multiple. Check here.
Looking forward, the story for TROW is about more than just market gains. Lasting progress will depend on winning new assets, holding the line on fees, and keeping costs under control. The company is trying to broaden its reach with more active ETFs and alternative strategies, but net outflows from traditional stock funds are still a challenge. Investors should be careful to distinguish between asset growth that comes from a rising market and growth that’s actually driven by new clients or products.
The share price tells much the same story. TROW stock lost significant ground in 2022 and slipped again in 2025. Revenue reflects this cycle as well: After peaking at $7.67 billion in 2021, revenue fell to $6.49 billion in 2022 and $6.46 billion in 2023, then perked up to $7.31 billion in 2025. This recovery has not restored the valuation investors once assigned to the business.
The Multiple Has Fallen, but Have the Risks?
T. Rowe Price’s valuation reflects a business caught between strong profitability and a challenging growth outlook. At around $104–$105 per share in early October 2026, the stock trades at approximately 10.2-10.5 times trailing earnings and 10.2 times forward earnings. That is a modest multiple for an established asset manager, but the discount is not without reason.
The central issue is earnings durability. Rising markets can lift assets under management and fee revenue without requiring equivalent growth in new client assets. Persistent outflows, meanwhile, can erode the company’s revenue base even when investment markets perform well. T. Rowe Price’s $6.5 billion in net outflows during the second quarter of 2026 illustrates this challenge, despite record assets under management of $1.89 trillion. Its effective investment advisory fee rate also declined year over year, highlighting pressure on revenue per dollar managed.
The forward P/E of approximately 10.2 times implies an earnings yield of about 9.8%. That offers a meaningful return cushion relative to the roughly 4%-5% yields available on longer-term U.S. Treasuries, although equity earnings are less certain than bond payments. The dividend, yielding around 5% at the prevailing share price, adds to the potential return. But neither a high earnings yield nor an attractive dividend guarantees value if earnings deteriorate. This high yield makes it one of the best income plays to invest in.
The historical comparison is also important. T. Rowe Price has traded at substantially higher earnings multiples during periods when active management enjoyed stronger flows and investors expected more consistent growth. Its current discount suggests the market is pricing in prolonged competitive pressure rather than a quick return to its previous valuation. A sustained recovery in net flows, stable fee rates, and stronger underlying EPS growth could support a re-rating. Until those improvements become evident, the low multiple looks more like compensation for business risk than an obvious mispricing.
Conclusion
Overall, T. Rowe Price appears reasonably valued for an income-oriented investor, but a stronger bullish case requires evidence that earnings can grow sustainably, not merely that the stock is cheap relative to its past.
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This article is originally published at Insider Monkey.
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