Summary
- A year and a half ago, I looked at T. Rowe Price as a “low bar” investment.
- Since that time, the share price has increased dramatically.
- Yet, so too has the underlying profit machine.
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Back in January 2017, I highlighted Maryland-based asset manager T. Rowe Price (NASDAQ:TROW) as a potential “low bar” investment. This notion was based on two basic principles: the quality of the business and overall valuation. The idea was that the business did not need to show substantial improvement in order for shareholders to receive reasonable or better investment results.
As we sit here today, over a year and a half later, the question is worth exploring again: “Is T. Rowe Price still a “low bar” investment?” The interesting thing about this question is that some things have changed materially in the last 19 months, while other items are largely the same.
Let’s begin by looking at the quality of the business.
For this aspect, I like to break it down into three parts - past, present and future, or balance sheet, pricing power and future growth prospects. We’ll save the last item for now and focus on the balance sheet and the firm’s pricing power.
