T. Rowe Price's 3Q profit tops Street expectations

BALTIMORE -- Financial services firm T. Rowe Price Group Inc. reported a better-than-expected 25 percent increase in third-quarter profit Wednesday, buoyed by stock-market gains that resulted in a big jump in revenue from investment advisory fees.

The company also benefited from net inflows of $4.3 billion during the quarter, as investors sank more money into its target-date retirement funds and other mutual funds.

Net earnings available to common shareholders were $245.7 million, or 94 cents per share, for the July-through-September period. That compared with $184.6 million, or 71 cents per share, for the 2011 third quarter. Results included a gain of $31.2 million, or 7 cents per share, from the sale of investments in sponsored mutual funds.

Revenue rose 12 percent to $769.7 million from $679.4 million last year.

Analysts, on average, were expecting earnings of 84 cents per share, on revenue of $766.3 million, according to FactSet.

CEO James A.C. Kennedy attributed the strong results to a rising market coupled with healthy inflows from investors.

"Despite global economic worries, equity markets rose during the third quarter sparked by a wave of central bank actions and strong corporate earnings growth," he said in a statement.

Also underpinning stocks' rise is the fact that U.S. economic growth, "though subdued, is steady," Kennedy said.

About half of total net inflows during the quarter, or $2.2 billion, were into increasingly popular target-date funds.

T. Rowe said investment advisory revenue for the quarter increased by $83.4 million to $661.4 million, and average assets under management were up $67.3 billion, or 14 percent, to $557.8 billion.

Assets under management as of Sept. 30 included $342.9 billion in T. Rowe Price mutual funds distributed in the United States and $231.5 billion in other managed investment portfolios.

Shares in T. Rowe Price, which had risen nearly 20 percent since early June, added 16 cents to $64.86 in midday trading.