(Bloomberg News) T. Rowe Price Group Inc., the asset manager that has posted a profit every quarter since going public in 1986, said third-quarter earnings rose 33 percent, beating analysts' estimates, as global stock markets rallied and investors made net deposits.
Net income increased to $245.7 million, or 94 cents a share, from $184.6 million, or 71 cents, a year earlier, the Baltimore-based company said today in a statement. The average estimate of 12 analysts surveyed by Bloomberg was a profit of 84 cents a share. Earnings were also boosted by 7 cents a share from the sale of investments in sponsored mutual funds.
"The key is the market is up for the quarter, it's up for the year, our cash flows are positive and our performance continues to be very good," Chief Executive Officer James Kennedy said in a telephone interview today.
The company has benefited as investment performance at funds beat rivals and retirement-oriented offerings drew investors. Clients added $4.3 billion in new money to T. Rowe Price funds in the three months ended Sept. 30, including $2.2 billion in target-date retirement portfolios. Assets rose 6 percent to $574.4 billion during the quarter as market appreciation added $28.4 billion.
T. Rowe Price rose 0.6 percent to $65.10 at 9:55 a.m. in New York. Shares rose 14 percent this year through yesterday, compared with the 18 percent increase for Standard & Poor's 20- company index of asset managers and custody banks.
The S&P 500 Index, a benchmark for U.S. stocks, gained 5.8 percent last quarter and global stocks, as measured by the MSCI AC World Index, rose 6.2 percent.
T. Rowe Price has gathered deposits even as investors withdrew $82.6 billion from U.S. funds that buy domestic stocks this year through September, data compiled by Morningstar Inc. show.
BlackRock Inc., the world's largest asset manager, said clients redeemed a net $55 billion in the third quarter, despite deposits of $20.5 billion into equity exchange-traded funds. BlackRock said a single institutional investor pulled more than $72 billion from a fixed-income portfolio, after the firm didn't want to rebid for the business at lower fees. Assets rose 3.2 percent during the three months to $3.67 trillion, the company said last week, fueled by market gains of $134 billion.
At T. Rowe, 72 percent of the firm's mutual funds beat the average return of their peers in this year's first nine months, according to data compiled by Chicago-based Morningstar. About three quarters of T. Rowe's assets are invested in equities.