T. Rowe Price adjusted earnings reach $2.86 a share, beating forecasts despite outflows
Key Facts
T. Rowe Price reported on October 29 adjusted diluted earnings per share of $2.86 for the third quarter of 2026, exceeding the average analyst estimate of $2.64 by $0.22, according to a Reuters report published by Investing.com. The result came as net client outflows reached $28.3 billion during the quarter, highlighting the contrast between revenue growth and continued withdrawals. Assets under management reached $1.86 trillion on September 30, despite declining during the quarter. Net revenue was $2.0 billion, up year over year and quarter over quarter, according to a report by Quiver Quantitative. The company's shares rose 2.95% in premarket trading after the results, according to the Reuters-attributed report.
The adjusted earnings figure differs from diluted earnings per share of $2.79 under generally accepted accounting principles (GAAP), which Quiver reported alongside net income attributable to T. Rowe Price Group of $612.3 million in the third quarter. The $0.22 beat therefore applies to adjusted earnings of $2.86, compared with consensus of $2.64, and not to GAAP earnings per share. Separating the two measures gives a clearer picture of the quarter: adjusted earnings above analyst estimates and GAAP earnings of $2.79 a share. The Reuters-attributed report in the information available here did not give a separate analyst estimate for the GAAP measure.
Revenue growth came as investment advisory fees rose 5.8% year over year to $1.80 billion. Average assets under management also increased 9.5% from the same period a year earlier, reaching $1.89 trillion during the quarter. That increase in the average coincided with assets of $1.86 trillion at the end of September, below the period average, while ending assets fell $30.7 billion during the quarter, according to Quiver. Net revenue rose 5.9% year over year and 5.1% from the previous quarter to $2.0 billion. These figures link revenue performance to higher advisory fees and the volume of average assets during the quarter, while net flows remained negative.
By contrast, net outflows totaled $28.3 billion in the quarter ended in September, including $1.2 billion in manager-led distributions, according to the company's disclosure on assets. Outflows reached $12.2 billion in September alone, including a sizable withdrawal from a target-date fund in defined contribution plans. This means pressure on flows was not limited to the quarter's combined total: the final month alone recorded substantial negative flows. The company said assets under management stood at $1.86 trillion at the end of September, while Quiver reported that ending assets fell $30.7 billion during the quarter. The comparison between growth in average assets and advisory fees on one hand, and money leaving during the quarter and the month on the other, shows a divergence between revenue and flows.
On costs, operating expenses totaled $1.24 billion in the third quarter, down 1.2% from the third quarter of 2025, according to Quiver. The year-over-year decline came alongside higher revenue and investment advisory fees, while net income attributable to the group was $612.3 million and GAAP earnings per share were $2.79. The published figures thus offer several ways to assess the quarter: higher revenue, average assets and fees, lower expenses, and continued outflows. In the second quarter of 2026, the company had reported adjusted diluted earnings per share of $2.57 and net client outflows of $6.5 billion. Third-quarter outflows therefore exceeded the previous quarter's level, while adjusted earnings per share rose to $2.86.
T. Rowe Price announced in August an agreement to acquire F/m Investments, a fixed-income asset manager specializing in exchange-traded funds, with about $19 billion in assets under management as of July 31, 2026. The company said when announcing the agreement that the deal was expected to close in early 2027. The acquisition forms part of the backdrop to a quarter marked by net outflows, while the current results focus on revenue and advisory-fee growth and the level of assets. The third-quarter results were scheduled for release on October 29 at 7:00 a.m. Eastern Time, followed by an earnings call from 8:00 to 8:45 a.m. that day, according to the investor relations page. In trading on October 28, TROW closed at $104, according to EL7 data.