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James Li
James Li
Articles (755)  | Author's Website |

T Rowe Price Equity Income Fund Buys 6 Stocks in 1st Quarter

Top buys include Conagra and Fox spinoff

The T Rowe Price Equity Income Fund (Trades, Portfolio), part of T. Rowe Price Group Inc. (NASDAQ:TROW), disclosed this week its six new holdings for the first quarter were Conagra Brands Inc. (NYSE:CAG), Fox Corp. (NASDAQ:FOX), Pioneer Natural Resources Co. (NYSE:PXD), Zimmer Biomet Holdings Inc. (NYSE:ZBH), Equitrans Midstream Corp. (NYSE:ETRN) and Westinghouse Air Brake Technologies Corp. (NYSE:WAB).

Managed by John Linehan, the Baltimore-based fund seeks long-term capital appreciation through investments in undervalued companies with potential to pay above-average dividends. As of quarter-end, the $18.79 billion equity portfolio’s top three sectors in terms of portfolio weight are financial services, health care and energy.


Conagra Brands

The fund invested in 7.54 million shares of Conagra Brands, giving the position 1.11% equity portfolio space. The stock traded for an average price of $22.9 per share during the quarter. 


The Chicago-based company manufactures branded consumer foods like Hunt’s, Slim Jim and Reddi-wip. GuruFocus ranks the company’s profitability 4 out of 10 primarily due to a three-year revenue decline rate of 20.60%, a rate that underperforms 70% of global competitors. Despite this, Conagra Brands’ operating margin is near a 10-year high of 13.02% and outperforms 71.40% of global packaged foods companies.



The fund disclosed a 3,930,003-share stake in Fox Corp, the standalone company formed through the pro rata distribution by Twenty-First Century Fox Inc. (NASDAQ:TFCF) in light of the merger with The Walt Disney Co. (NYSE:DIS). Shares of Fox averaged $38.11 during the quarter and occupy 0.75% of the fund’s equity portfolio.

Fox said in an April 8 press release that revenues for the three months ending Dec. 31 were $3.583 billion, up approximately $1.042 billion from the prior three months. Despite this, net income for the fourth quarter was just $24 million, driven by higher operating expenses; selling, general and administrative expenses; and other expenses.

Pioneer Natural Resources

The fund invested in 825,000 shares of Pioneer Natural Resources, giving the position 0.67% equity portfolio weight. The stock traded around an average price of $141.12 per share during the quarter. 


The Irving, Texas-based company produces oil and natural gas throughout the southern U.S., focusing primarily on the Permian Basin and Eagle Ford Shale regions. GuruFocus ranks the company’s profitability 8 out of 10 on several positive signs, which include a strong Piotroski F-score of 7 and profit margins that are outperforming over 70% of global competitors.


Zimmer Biomet Holdings

The fund invested in 275,000 shares of Zimmer Biomet Holdings, giving the position 0.19% equity portfolio space. During the quarter, the stock traded for an average price of $116.76 per share. 


The Warsaw, Indiana-based company designs, manufactures and markets orthopedic reconstructive implants and other supplies used in orthopedic surgery. GuruFocus ranks the company’s profitability 7 out of 10, driven by net profit margins that outperform approximately 93% of global competitors and a return on equity that outperforms approximately 88% of global competitors. Despite this, Zimmer Biomet’s three-year Ebitda growth rate of -2.80% underperforms 53% of global medical devices companies.


Equitrans Midstream

The fund invested in 1.425 million shares of Equitrans Midstream, giving the position 0.17% equity portfolio space. The stock traded around an average price of $20.03 per share during the quarter.


The Pittsburgh-based company said on April 10 that EQM Midstream Partners LP (NYSE:EQM), a company where Equitrans has majority ownership of the limited partnership interest in, completed the acquisition of a 60% interest in Eureka Midstream and a 100% interest in Hornet Midstream for approximately $860 million in cash and $170 million in assumed pro rata debt.


The fund invested in 75,596 shares of Westinghouse, giving the position 0.03% equity portfolio space. The stock traded for an average price of $72.15 during the quarter.


The Wilmerding, Pennsylvania-based company provides value-added, technology-based products and services for the rail industry through two business segments: freight and transit. GuruFocus ranks the company’s profitability 8 out of 10 on several positive signs, which include consistent revenue growth and a strong Piotroski F-score of 8. The company’s business predictability ranks 2.5 stars out of five: Although the company has consistent revenue growth over the past 10 years, Westinghouse’s Ebitda has declined approximately 4.70% per year over the past three years, a rate that underperforms 70% of global competitors.


Disclosure: No positions.

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About the author:

James Li
I am an editorial assistant and researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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