Research Alert: T. Rowe Price Q1 2026: Eps Beat Belies Persistent Outflows And Fee Compression
CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:TROW delivered Q1 2026 adjusted EPS of $2.52, up 13% from $2.23 in the prior year, beating our $2.50 estimate and the $2.35 consensus estimate. However, results were overshadowed by continued structural headwinds. Net outflows of $13.7B were dominated by $22.6B in outflows from equity funds, reflecting the ongoing secular shift away from active equity strategies. AUM declined $65.9B to $1.7T due to outflows and $52.2B in market depreciation. Meanwhile, fee rate compression continued, with the rate falling to 38.4 bps from 40.0 bps in the prior year. Investment advisory fees rose 5.3% to $1.68B despite declining rates. Meanwhile, operating expenses increased only 0.8% to $1.18B, demonstrating expense discipline amid a 7.1% workforce reduction. We believe TROW's 47% weighting in actively managed equities leaves it particularly vulnerable to industry-wide shifts toward passive vehicles. The firm faces persistent secular challenges despite solid expense management and necessary technology investments.