Intrinsic value of T. Rowe Price Group - TROW

Previous Close

$83.83

  Intrinsic Value

$132.48

stock screener

  Rating & Target

str. buy

+58%

  Value-price divergence*

+18%

Previous close

$83.83

 
Intrinsic value

$132.48

 
Up/down potential

+58%

 
Rating

str. buy

 
Value-price divergence*

+18%

Our model is not good at valuating stocks of financial companies, such as TROW.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of TROW stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 20.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  0.52
  12.10
  11.39
  10.75
  10.18
  9.66
  9.19
  8.77
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.80
  6.62
  6.46
  6.32
  6.18
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
Revenue, $m
  4,223
  4,734
  5,273
  5,840
  6,434
  7,056
  7,704
  8,380
  9,084
  9,816
  10,577
  11,367
  12,189
  13,043
  13,930
  14,853
  15,813
  16,812
  17,851
  18,934
  20,062
  21,239
  22,465
  23,746
  25,083
  26,479
  27,938
  29,463
  31,057
  32,726
  34,471
Variable operating expenses, $m
 
  2,586
  2,873
  3,175
  3,491
  3,822
  4,167
  4,527
  4,901
  5,291
  5,696
  6,050
  6,487
  6,942
  7,414
  7,905
  8,416
  8,948
  9,501
  10,077
  10,678
  11,304
  11,957
  12,638
  13,350
  14,093
  14,869
  15,681
  16,530
  17,418
  18,347
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  2,490
  2,586
  2,873
  3,175
  3,491
  3,822
  4,167
  4,527
  4,901
  5,291
  5,696
  6,050
  6,487
  6,942
  7,414
  7,905
  8,416
  8,948
  9,501
  10,077
  10,678
  11,304
  11,957
  12,638
  13,350
  14,093
  14,869
  15,681
  16,530
  17,418
  18,347
Operating income, $m
  1,733
  2,148
  2,400
  2,665
  2,943
  3,234
  3,537
  3,853
  4,183
  4,525
  4,881
  5,317
  5,702
  6,101
  6,516
  6,948
  7,397
  7,864
  8,350
  8,857
  9,385
  9,935
  10,509
  11,108
  11,733
  12,386
  13,068
  13,782
  14,528
  15,308
  16,125
EBITDA, $m
  1,866
  2,283
  2,543
  2,817
  3,103
  3,403
  3,716
  4,042
  4,381
  4,734
  5,101
  5,482
  5,878
  6,290
  6,718
  7,163
  7,626
  8,108
  8,609
  9,131
  9,675
  10,243
  10,834
  11,452
  12,097
  12,770
  13,474
  14,209
  14,978
  15,783
  16,625
Interest expense (income), $m
  0
  0
  5
  11
  16
  22
  29
  35
  42
  49
  56
  64
  72
  80
  89
  98
  107
  117
  127
  137
  148
  159
  171
  184
  197
  210
  224
  239
  254
  270
  287
Earnings before tax, $m
  1,961
  2,148
  2,395
  2,655
  2,927
  3,212
  3,509
  3,818
  4,141
  4,476
  4,825
  5,253
  5,630
  6,021
  6,427
  6,850
  7,290
  7,747
  8,224
  8,720
  9,236
  9,775
  10,337
  10,924
  11,536
  12,176
  12,844
  13,543
  14,274
  15,038
  15,838
Tax expense, $m
  707
  580
  647
  717
  790
  867
  947
  1,031
  1,118
  1,209
  1,303
  1,418
  1,520
  1,626
  1,735
  1,850
  1,968
  2,092
  2,220
  2,354
  2,494
  2,639
  2,791
  2,949
  3,115
  3,287
  3,468
  3,657
  3,854
  4,060
  4,276
Net income, $m
  1,215
  1,568
  1,748
  1,938
  2,137
  2,345
  2,561
  2,787
  3,023
  3,267
  3,522
  3,835
  4,110
  4,395
  4,692
  5,001
  5,322
  5,655
  6,003
  6,365
  6,743
  7,136
  7,546
  7,974
  8,421
  8,888
  9,376
  9,886
  10,420
  10,978
  11,562

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,205
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  6,225
  5,629
  6,270
  6,944
  7,651
  8,390
  9,161
  9,965
  10,801
  11,672
  12,576
  13,516
  14,493
  15,509
  16,564
  17,661
  18,802
  19,990
  21,226
  22,514
  23,855
  25,254
  26,713
  28,235
  29,825
  31,485
  33,220
  35,033
  36,929
  38,913
  40,989
Adjusted assets (=assets-cash), $m
  5,020
  5,629
  6,270
  6,944
  7,651
  8,390
  9,161
  9,965
  10,801
  11,672
  12,576
  13,516
  14,493
  15,509
  16,564
  17,661
  18,802
  19,990
  21,226
  22,514
  23,855
  25,254
  26,713
  28,235
  29,825
  31,485
  33,220
  35,033
  36,929
  38,913
  40,989
Revenue / Adjusted assets
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
Average production assets, $m
  612
  686
  765
  847
  933
  1,023
  1,117
  1,215
  1,317
  1,423
  1,534
  1,648
  1,767
  1,891
  2,020
  2,154
  2,293
  2,438
  2,588
  2,745
  2,909
  3,080
  3,257
  3,443
  3,637
  3,839
  4,051
  4,272
  4,503
  4,745
  4,998
Working capital, $m
  0
  -473
  -527
  -584
  -643
  -706
  -770
  -838
  -908
  -982
  -1,058
  -1,137
  -1,219
  -1,304
  -1,393
  -1,485
  -1,581
  -1,681
  -1,785
  -1,893
  -2,006
  -2,124
  -2,247
  -2,375
  -2,508
  -2,648
  -2,794
  -2,946
  -3,106
  -3,273
  -3,447
Total debt, $m
  0
  146
  301
  465
  636
  814
  1,001
  1,195
  1,398
  1,609
  1,827
  2,055
  2,291
  2,537
  2,792
  3,058
  3,334
  3,622
  3,921
  4,232
  4,557
  4,895
  5,249
  5,617
  6,002
  6,403
  6,823
  7,262
  7,721
  8,201
  8,703
Total liabilities, $m
  1,216
  1,362
  1,517
  1,681
  1,852
  2,030
  2,217
  2,411
  2,614
  2,825
  3,043
  3,271
  3,507
  3,753
  4,008
  4,274
  4,550
  4,838
  5,137
  5,448
  5,773
  6,111
  6,465
  6,833
  7,218
  7,619
  8,039
  8,478
  8,937
  9,417
  9,919
Total equity, $m
  5,009
  4,267
  4,753
  5,264
  5,799
  6,359
  6,944
  7,553
  8,187
  8,847
  9,533
  10,245
  10,986
  11,756
  12,555
  13,387
  14,252
  15,152
  16,089
  17,065
  18,082
  19,142
  20,248
  21,402
  22,607
  23,865
  25,180
  26,555
  27,992
  29,496
  31,069
Total liabilities and equity, $m
  6,225
  5,629
  6,270
  6,945
  7,651
  8,389
  9,161
  9,964
  10,801
  11,672
  12,576
  13,516
  14,493
  15,509
  16,563
  17,661
  18,802
  19,990
  21,226
  22,513
  23,855
  25,253
  26,713
  28,235
  29,825
  31,484
  33,219
  35,033
  36,929
  38,913
  40,988
Debt-to-equity ratio
  0.000
  0.030
  0.060
  0.090
  0.110
  0.130
  0.140
  0.160
  0.170
  0.180
  0.190
  0.200
  0.210
  0.220
  0.220
  0.230
  0.230
  0.240
  0.240
  0.250
  0.250
  0.260
  0.260
  0.260
  0.270
  0.270
  0.270
  0.270
  0.280
  0.280
  0.280
Adjusted equity ratio
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,215
  1,568
  1,748
  1,938
  2,137
  2,345
  2,561
  2,787
  3,023
  3,267
  3,522
  3,835
  4,110
  4,395
  4,692
  5,001
  5,322
  5,655
  6,003
  6,365
  6,743
  7,136
  7,546
  7,974
  8,421
  8,888
  9,376
  9,886
  10,420
  10,978
  11,562
Depreciation, amort., depletion, $m
  133
  135
  143
  151
  160
  169
  178
  188
  198
  209
  220
  165
  177
  189
  202
  215
  229
  244
  259
  275
  291
  308
  326
  344
  364
  384
  405
  427
  450
  475
  500
Funds from operations, $m
  174
  1,703
  1,891
  2,089
  2,297
  2,513
  2,740
  2,976
  3,221
  3,476
  3,742
  4,000
  4,286
  4,584
  4,894
  5,216
  5,551
  5,899
  6,262
  6,640
  7,033
  7,444
  7,872
  8,319
  8,785
  9,272
  9,781
  10,314
  10,870
  11,452
  12,061
Change in working capital, $m
  3
  -51
  -54
  -57
  -59
  -62
  -65
  -68
  -70
  -73
  -76
  -79
  -82
  -85
  -89
  -92
  -96
  -100
  -104
  -108
  -113
  -118
  -123
  -128
  -134
  -140
  -146
  -153
  -159
  -167
  -175
Cash from operations, $m
  171
  1,754
  1,945
  2,146
  2,356
  2,576
  2,805
  3,043
  3,291
  3,550
  3,818
  4,079
  4,369
  4,670
  4,983
  5,308
  5,647
  5,999
  6,366
  6,748
  7,146
  7,562
  7,995
  8,447
  8,919
  9,412
  9,927
  10,466
  11,030
  11,619
  12,236
Maintenance CAPEX, $m
  0
  -61
  -69
  -76
  -85
  -93
  -102
  -112
  -122
  -132
  -142
  -153
  -165
  -177
  -189
  -202
  -215
  -229
  -244
  -259
  -275
  -291
  -308
  -326
  -344
  -364
  -384
  -405
  -427
  -450
  -475
New CAPEX, $m
  -148
  -74
  -78
  -82
  -86
  -90
  -94
  -98
  -102
  -106
  -110
  -115
  -119
  -124
  -129
  -134
  -139
  -145
  -151
  -157
  -164
  -171
  -178
  -186
  -194
  -202
  -212
  -221
  -231
  -242
  -253
Cash from investing activities, $m
  106
  -135
  -147
  -158
  -171
  -183
  -196
  -210
  -224
  -238
  -252
  -268
  -284
  -301
  -318
  -336
  -354
  -374
  -395
  -416
  -439
  -462
  -486
  -512
  -538
  -566
  -596
  -626
  -658
  -692
  -728
Free cash flow, $m
  277
  1,619
  1,798
  1,987
  2,185
  2,392
  2,608
  2,833
  3,068
  3,312
  3,565
  3,811
  4,085
  4,369
  4,665
  4,972
  5,292
  5,625
  5,971
  6,332
  6,708
  7,100
  7,509
  7,935
  8,381
  8,846
  9,332
  9,840
  10,371
  10,927
  11,508
Issuance/(repayment) of debt, $m
  0
  146
  155
  163
  171
  179
  187
  195
  202
  211
  219
  228
  236
  246
  255
  266
  276
  287
  299
  312
  325
  338
  353
  368
  385
  402
  420
  439
  459
  480
  502
Issuance/(repurchase) of shares, $m
  -551
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  365
  146
  155
  163
  171
  179
  187
  195
  202
  211
  219
  228
  236
  246
  255
  266
  276
  287
  299
  312
  325
  338
  353
  368
  385
  402
  420
  439
  459
  480
  502
Total cash flow (excl. dividends), $m
  639
  1,765
  1,954
  2,150
  2,356
  2,571
  2,795
  3,028
  3,270
  3,522
  3,784
  4,038
  4,321
  4,615
  4,920
  5,238
  5,568
  5,912
  6,271
  6,644
  7,033
  7,439
  7,862
  8,304
  8,765
  9,248
  9,752
  10,279
  10,830
  11,407
  12,011
Retained Cash Flow (-), $m
  -247
  -463
  -486
  -511
  -536
  -560
  -585
  -609
  -634
  -660
  -686
  -713
  -741
  -770
  -800
  -832
  -865
  -900
  -937
  -976
  -1,017
  -1,060
  -1,106
  -1,154
  -1,205
  -1,258
  -1,315
  -1,375
  -1,437
  -1,504
  -1,573
Prev. year cash balance distribution, $m
 
  1,205
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,507
  1,468
  1,639
  1,821
  2,011
  2,210
  2,419
  2,636
  2,863
  3,099
  3,326
  3,580
  3,845
  4,120
  4,406
  4,703
  5,012
  5,334
  5,668
  6,016
  6,378
  6,756
  7,150
  7,561
  7,989
  8,437
  8,904
  9,393
  9,903
  10,437
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  2,404
  1,344
  1,427
  1,499
  1,559
  1,604
  1,634
  1,648
  1,645
  1,624
  1,579
  1,528
  1,462
  1,383
  1,294
  1,195
  1,091
  982
  873
  764
  660
  561
  469
  385
  311
  246
  191
  145
  108
  79
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

T. Rowe Price Group, Inc. is a publicly owned investment manager. The firm provides its services to individuals, institutional investors, retirement plans, financial intermediaries, and institutions. It launches and manages equity and fixed income mutual funds. The firm invests in the public equity and fixed income markets across the globe. It employs fundamental and quantitative analysis with a bottom-up approach. The firm utilizes in-house and external research to make its investments. It employs socially responsible investing with a focus on environmental, social, and governance issues. It makes investment in late-stage venture capital transactions and usually invests between $3 million and $5 million. The firm was previously known as T. Rowe Group, Inc. and T. Rowe Price Associates, Inc. T. Rowe Price Group, Inc. was founded in 1937 and is based in Baltimore, Maryland, with additional offices in Colorado Springs, Colorado; Owings Mills, Maryland; San Francisco, California; Tampa, Florida; Toronto, Ontario; Hellerup, Denmark; Amsterdam, The Netherlands; Luxembourg, Grand Duchy of Luxembourg; Zurich, Switzerland; Dubai, United Arab Emirates; London, United Kingdom; Sydney, New South Wales; Hong Kong; Tokyo, Japan; Singapore; Frankfurt, Germany, Madrid, Spain, Milan, Italy, Stockholm, Sweden, Melbourne, Australia, and Amsterdam, Netherlands.

FINANCIAL RATIOS  of  T. Rowe Price Group (TROW)

Valuation Ratios
P/E Ratio 16.9
Price to Sales 4.9
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 120
Price to Free Cash Flow 892.2
Growth Rates
Sales Growth Rate 0.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -2%
Cap. Spend. - 3 Yr. Gr. Rate 6.9%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 21.4%
Ret/ On Assets - 3 Yr. Avg. 22.4%
Return On Total Capital 24.9%
Ret/ On T. Cap. - 3 Yr. Avg. 24.3%
Return On Equity 24.9%
Return On Equity - 3 Yr. Avg. 24.3%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 49.6%
EBITDA Margin - 3 Yr. Avg. 51.1%
Operating Margin 41%
Oper. Margin - 3 Yr. Avg. 44.6%
Pre-Tax Margin 46.4%
Pre-Tax Margin - 3 Yr. Avg. 48.1%
Net Profit Margin 28.8%
Net Profit Margin - 3 Yr. Avg. 29.6%
Effective Tax Rate 36.1%
Eff/ Tax Rate - 3 Yr. Avg. 37.9%
Payout Ratio 44.5%

TROW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TROW stock intrinsic value calculation we used $4223 million for the last fiscal year's total revenue generated by T. Rowe Price Group. The default revenue input number comes from 2016 income statement of T. Rowe Price Group. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TROW stock valuation model: a) initial revenue growth rate of 12.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for TROW is calculated based on our internal credit rating of T. Rowe Price Group, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of T. Rowe Price Group.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TROW stock the variable cost ratio is equal to 54.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TROW stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for T. Rowe Price Group.

Corporate tax rate of 27% is the nominal tax rate for T. Rowe Price Group. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TROW stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TROW are equal to 14.5%.

Life of production assets of 10 years is the average useful life of capital assets used in T. Rowe Price Group operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TROW is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5009 million for T. Rowe Price Group - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 240.452 million for T. Rowe Price Group is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of T. Rowe Price Group at the current share price and the inputted number of shares is $20.2 billion.

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COMPANY NEWS

▶ T. Rowe Price's strong second quarter boosted by stock rally   [Jul-25-17 11:15PM  American City Business Journals]
▶ T. Rowe beats Street 2Q forecasts   [10:01PM  Associated Press]
▶ T. Rowe Price Surprises, Again!   [09:46AM  Barrons.com]
▶ [$$] Bond funds attract $355bn in first five months of 2017   [Jul-23-17 11:03PM  Financial Times]
▶ These 3 Dividend Aristocrats Are Ridiculously Cheap   [Jul-21-17 08:12AM  Motley Fool]
▶ The Best Stock in Maryland: T. Rowe Price   [Jul-19-17 09:50AM  Kiplinger]
▶ [$$] The Coming Revolution in Investment Research   [Jul-15-17 12:45AM  Barrons.com]
▶ Gap Was the S&P 500s Top Gainer on July 13   [Jul-14-17 10:01AM  Market Realist]
▶ Airlines, pharma, financials & more in the blitz   [Jul-13-17 02:49PM  CNBC Videos]
▶ T. Rowe Price Stock Pops on New AUM Data   [01:59PM  Barrons.com]
▶ An Uncertain Future for Asset Managers   [Jul-04-17 06:00AM  Morningstar]
▶ Baltimore nanotech firm Pixelligent looks to raise $3.5 million in new funding   [Jul-03-17 01:10PM  American City Business Journals]
▶ 10 Biggest 401k Companies in America   [Jul-02-17 04:14PM  Insider Monkey]
▶ T. Rowe Price: Get Outta Here Chicken Little   [Jun-30-17 01:17PM  Barrons.com]
▶ T. Rowe Price Launches Retirement Income 2020 Fund   [Jun-27-17 11:13AM  PR Newswire]
▶ BlackRock on the Street: Analyst Ratings, Macro Concerns   [Jun-22-17 07:36AM  Market Realist]
▶ Argan and Sturm Ruger Show High Profit and Low Debt   [Jun-20-17 06:06PM  GuruFocus.com]
▶ [$$] Investors hunt for hidden frontier market gems   [Jun-18-17 11:02PM  Financial Times]
▶ Where to Find Value in a Lofty Market   [Jun-16-17 01:35PM  GuruFocus.com]
▶ Rowing Upstream For Alpha   [Jun-13-17 09:45AM  Forbes]
▶ Mason Hawkins Buys Consol Energy, Viasat, Sonic   [Jun-09-17 04:59PM  GuruFocus.com]
▶ Greater Baltimore remains without a Fortune 500 company as Under Armour creeps closer   [Jun-07-17 12:00PM  American City Business Journals]
▶ The 5 largest public companies in the Baltimore area   [Jun-02-17 07:40AM  American City Business Journals]
▶ T. Rowe Price Launches U.S. High Yield Fixed Income Fund   [May-30-17 01:17PM  PR Newswire]
▶ T. Rowe Price shares down after analyst raises concerns over fiduciary rule   [May-24-17 03:40PM  American City Business Journals]
▶ Legg Mason launches two new exchange-traded funds   [May-23-17 02:35PM  American City Business Journals]
▶ Pioneer Investments Buys Broadcom, Adobe, FedEx   [May-09-17 05:44PM  GuruFocus.com]
▶ Under Armour is now Greater Baltimore's largest public company   [May-03-17 09:36AM  American City Business Journals]
▶ T Rowe Price's 1st-Quarter Stock Sells   [May-01-17 04:02PM  GuruFocus.com]
▶ On eve of Cloudera IPO, analysts offer ways to judge its success   [08:45AM  American City Business Journals]
▶ Legg Mason: "Positive But Volatile"   [Apr-27-17 12:39PM  Barrons.com]
▶ T. Rowe Price Trades Higher On In-Line Q1 Earnings   [Apr-26-17 03:40PM  Barrons.com]
▶ T. Rowe Price earnings rise but stock falls   [Apr-25-17 11:05AM  American City Business Journals]
▶ T. Rowe Price Group Don't Get No Respect   [09:57AM  Barrons.com]
▶ 3 Dividend Aristocrats We Refuse to Buy   [09:09AM  Motley Fool]
▶ T. Rowe misses 1Q profit forecasts   [07:50AM  Associated Press]
▶ Baltimore's biggest companies report earnings this week. Here's what to look for.   [Apr-24-17 03:15PM  American City Business Journals]
▶ 3 Top Dividend Aristocrats to Buy Now   [Apr-14-17 09:49AM  Motley Fool]
▶ Retirement Withdrawal Strategies That Keep the IRS at Bay   [Apr-11-17 09:34AM  TheStreet.com]
▶ T. Rowe Price: Free to Be Transaction-Fee Free   [Apr-03-17 02:23PM  Barrons.com]
▶ Diamond Hill Sells Morgan Stanley and IBM, Buys Pepsi   [Mar-28-17 04:36PM  GuruFocus.com]
Stock chart of TROW Financial statements of TROW Annual reports of TROW
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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