Critical Analysis: T. Rowe Price Group (NASDAQ:TROW) & MSCI (NYSE:MSCI)

T. Rowe Price Group (NASDAQ:TROW) and MSCI (NYSE:MSCI) are both large-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, risk, profitability and institutional ownership.

Valuation & Earnings

This table compares T. Rowe Price Group and MSCI”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
T. Rowe Price Group	$7.21 billion	3.11	$2.10 billion	$9.18	11.11
MSCI	$3.06 billion	14.10	$1.11 billion	$15.78	36.33

T. Rowe Price Group has higher revenue and earnings than MSCI. T. Rowe Price Group is trading at a lower price-to-earnings ratio than MSCI, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares T. Rowe Price Group and MSCI’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
T. Rowe Price Group	28.72%	19.77%	15.04%
MSCI	40.03%	-110.94%	24.20%

Volatility and Risk

T. Rowe Price Group has a beta of 1.5, indicating that its stock price is 50% more volatile than the S&P 500. Comparatively, MSCI has a beta of 1.33, indicating that its stock price is 33% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for T. Rowe Price Group and MSCI, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
T. Rowe Price Group	4	11	0	1	1.88
MSCI	0	4	9	1	2.79

T. Rowe Price Group presently has a consensus price target of $109.31, suggesting a potential upside of 7.13%. MSCI has a consensus price target of $655.90, suggesting a potential upside of 14.41%. Given MSCI’s stronger consensus rating and higher possible upside, analysts plainly believe MSCI is more favorable than T. Rowe Price Group.

Dividends

T. Rowe Price Group pays an annual dividend of $5.08 per share and has a dividend yield of 5.0%. MSCI pays an annual dividend of $7.20 per share and has a dividend yield of 1.3%. T. Rowe Price Group pays out 55.3% of its earnings in the form of a dividend. MSCI pays out 45.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. T. Rowe Price Group has raised its dividend for 39 consecutive years and MSCI has raised its dividend for 11 consecutive years. T. Rowe Price Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

73.4% of T. Rowe Price Group shares are owned by institutional investors. Comparatively, 90.0% of MSCI shares are owned by institutional investors. 2.0% of T. Rowe Price Group shares are owned by company insiders. Comparatively, 3.3% of MSCI shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

MSCI beats T. Rowe Price Group on 11 of the 17 factors compared between the two stocks.

About T. Rowe Price Group

T. Rowe Price Group, Inc. is a publicly owned investment manager. The firm provides its services to individuals, institutional investors, retirement plans, financial intermediaries, and institutions. It launches and manages equity and fixed income mutual funds. The firm invests in the public equity and fixed income markets across the globe. It employs fundamental and quantitative analysis with a bottom-up approach. The firm utilizes in-house and external research to make its investments. It employs socially responsible investing with a focus on environmental, social, and governance issues. It makes investment in late-stage venture capital transactions and usually invests between $3 million and $5 million. The firm was previously known as T. Rowe Group, Inc. and T. Rowe Price Associates, Inc. T. Rowe Price Group, Inc. was founded in 1937 and is based in Baltimore, Maryland, with additional offices in Colorado Springs, Colorado; Owings Mills, Maryland; San Francisco, California; New York, New York; Philadelphia, Pennsylvania; Tampa, Florida; Toronto, Ontario; Hellerup, Denmark; Amsterdam, The Netherlands; Luxembourg, Grand Duchy of Luxembourg; Zurich, Switzerland; Dubai, United Arab Emirates; London, United Kingdom; Sydney, New South Wales; Hong Kong; Tokyo, Japan; Singapore; Frankfurt, Shanghai, China; Germany, Madrid, Spain, Milan, Italy, Stockholm, Sweden, Melbourne, Australia, Amsterdam, Netherlands and Washington, DC.

About MSCI

MSCI Inc., together with its subsidiaries, provides critical decision support tools and solutions for the investment community to manage investment processes worldwide. The Index segment provides indexes for use in various areas of the investment process, including indexed financial product, such as ETFs, mutual funds, annuities, futures, options, structured products, and over-the-counter derivatives; performance benchmarking; portfolio construction and rebalancing; and asset allocation, as well as licenses GICS and GICS Direct. The Analytics segment offers risk management, performance attribution and portfolio management content, application, an integrated view of risk and return service, and an analysis of market, credit, liquidity, counterparty, and climate risk across asset classes; managed services, including consolidation of client portfolio data, review and reconciliation of input data and results, and customized reporting; and HedgePlatform to measure, evaluate, and monitor the risk of hedge fund investments. The ESG and Climate segment provides products and services that help institutional investors understand how ESG impacts the long-term risk and return of their portfolio and individual security-level investments; and data, ratings, research, and tools to help investors navigate increasing regulation. The All Other Private Assets segment includes real estate and infrastructure data, benchmarks, return-analytics, climate assessments and market insights; business intelligence to real estate owners, managers, developers, and brokers; and offers investment decision support tools for private capital. The Private Capital Solutions segment offers tools to help private asset investors across mission-critical workflows, such as sourcing terms and conditions, evaluating operating performance, managing risk and other activities supporting private capital investing. MSCI Inc. was incorporated in 1998 and is headquartered in New York, New York.