Franklin Resources (BEN) AI Stock Analysis

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Franklin Resources

(NYSE:BEN)

Rating:67Neutral

Price Target:―

Franklin Resources presents a stable financial position with strong revenue growth and operational efficiency. Despite challenges in cash flow and profitability, the company's financial health remains solid. Technical indicators suggest caution due to potential overbought conditions, while valuation metrics highlight a high P/E ratio offset by a strong dividend yield. The earnings call points to both strategic progress and ongoing challenges, resulting in a cautiously optimistic outlook.

Positive Factors

Management Strategy

Raising EPS estimates and price target shows a favorable outlook for BEN.

Market Performance

BEN shares sharply outperformed on earnings day, initially reacting to solid F2Q results and then rallying more during the conference call.

Revenue Growth

Private markets fundraising rose significantly in F2Q, indicating strong growth potential.

Negative Factors

Asset Management Challenges

WAM continues to outflow, picking up to $10B, which is a concern despite other positive factors.

Operating Expenses

Lowering adjusted EPS due to higher general and administrative and information services/tech expenses.

Stock Recommendation

Despite positivity, the recommendation remains underweight due to relatively more attractive opportunities elsewhere.

Franklin Resources (BEN) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$11.67B

Dividend Yield5.86%

Average Volume (3M)4.63M

Price to Earnings (P/E)32.2

Beta (1Y)1.04

Revenue Growth7.02%

EPS Growth-60.38%

CountryUS

Employees10,000

SectorFinancial

Sector Strength81

IndustryAsset Management

Share Statistics

EPS (TTM)0.47

Shares Outstanding525,521,300

10 Day Avg. Volume4,670,265

30 Day Avg. Volume4,633,076

Financial Highlights & Ratios

PEG Ratio3.04

Price to Book (P/B)0.88

Price to Sales (P/S)0.00

P/FCF Ratio16.87

Enterprise Value/Market Cap1.77

Enterprise Value/Revenue0.61

Enterprise Value/Gross Profit3.90

Enterprise Value/Ebitda3.51

Forecast

1Y Price Target

$19.80

Price Target Upside-10.85% Downside

Rating ConsensusModerate Sell

Number of Analyst Covering10

Franklin Resources Business Overview & Revenue Model

Company DescriptionFranklin Resources, Inc., commonly known as Franklin Templeton, is a global investment management organization headquartered in San Mateo, California. The company operates in the financial services sector, offering a wide range of investment solutions, including mutual funds, exchange-traded funds (ETFs), institutional accounts, and high-net-worth client accounts. Franklin Templeton provides investment management and related services to retail, institutional, and sovereign wealth clients across the globe, leveraging its expertise in equity, fixed income, alternatives, and multi-asset strategies.

How the Company Makes MoneyFranklin Resources generates revenue primarily through investment management fees, which are based on a percentage of assets under management (AUM). These fees vary depending on the type of investment product and the level of service provided. The company also earns performance fees, which are contingent on achieving specified investment return benchmarks. Additionally, Franklin Templeton receives distribution fees related to the sale of its investment products. Partnerships with financial advisors, brokerage firms, and institutional clients play a significant role in expanding its distribution network and client base, contributing to its earnings. The company's global presence and diversified investment offerings help mitigate risks associated with market volatility and economic fluctuations, providing a stable source of income.

Franklin Resources Earnings Call Summary

Earnings Call Date:May 02, 2025

(Q2-2025)

% Change Since: 18.52%|

Next Earnings Date:Jul 25, 2025

Earnings Call Sentiment Neutral

The earnings call presents a mixed picture with strong growth in institutional pipeline, positive net flows in alternatives and ETFs, and successful fund launches being offset by significant outflows, challenges at Western Asset Management, and decreased adjusted operating income. Although there are growth opportunities and positive trends in certain areas, the impact of market volatility and specific segment challenges weigh on overall performance.

Q2-2025 Updates

Positive Updates

Increased Institutional Pipeline

The institutional one but unfunded pipeline increased by $2.3 billion to $20.4 billion during the quarter, its highest level since 2022.

Global Revenue Distribution

Franklin Templeton has $470 billion, or about 30% of its AUM, in countries outside the US, with clients located in over 50 countries.

Positive Net Flows in Alternatives and Multi-Asset

Multi-asset and alternatives generated a combined $9.7 billion in positive net flows.

ETF Growth

The ETF business saw its fourteenth consecutive quarter of positive net flows, attracting $4.1 billion during Q2, reaching a record high AUM of $37 billion.

Launch of New Funds

Launched the Franklin Crypto Index ETF and Europe's first-ever tokenized usage fund, the Franklin Unchained US Government Money Fund.

Strong Investment Performance

Over half of the mutual fund AUM is outperforming its peer median across the one, three, five, and ten-year periods.

Successful Perpetual Fund Launches

Launched three perpetual offerings, including the Franklin Lexington Private Market Fund, with these funds raising an initial combined $2 billion.

Positive Trends in Fixed Income

Excluding Western, fixed income net inflows were $2.8 billion.

Negative Updates

Overall Decrease in AUM

Assets under management ended the quarter at $1.54 trillion, a decrease from the prior quarter due to long-term net outflows at Western Asset and negative markets.

Significant Net Outflows

Long-term net outflows were $26.2 billion, including $3.3 billion of reinvested distributions.

Western Asset Management Challenges

Western Asset faced $10 billion in outflows, despite having $5 billion in gross sales.

Negative Fixed Income Flows

Fixed income net outflows were $30.5 billion.

Decrease in Adjusted Operating Income

Adjusted operating income was $377.2 million, a decrease of 8.6% from the prior quarter.

Volatility Impacting IPO and M&A Activity

Heightened policy uncertainty and equity market setbacks tempered enthusiasm for IPOs and M&A activity.

Company Guidance

During the Franklin Resources earnings conference call for fiscal year 2025's second quarter, several key metrics were highlighted. Despite significant market volatility, the firm's institutional unfunded pipeline increased by $2.3 billion to $20.4 billion, marking its highest level since 2022. Assets under management (AUM) ended the quarter at $1.54 trillion, a decrease from the previous quarter due to long-term net outflows of $26.2 billion, with $3.3 billion of this from reinvested distributions. Excluding Western Asset, long-term net inflows were $7.4 billion. Notably, multi-asset and alternatives generated $9.7 billion in positive net flows, and the ETF business saw its fourteenth consecutive quarter of positive net flows, reaching a record high AUM of $37 billion. Additionally, Franklin Templeton's non-US business ended the quarter with approximately $470 billion in AUM, with positive net flows in both the EMEA and Americas regions. The company anticipates flat expenses for fiscal 2025 compared to 2024, adjusting for additional costs related to Putnam and performance fees.

Franklin Resources Financial Statement Overview

Summary

Franklin Resources shows steady revenue growth and strong operational efficiency. The balance sheet reflects low leverage and strong equity, although ROE is below industry average. The decline in Free Cash Flow is a concern, but overall financials are stable with room for improved profitability.

Income Statement

Positive

Franklin Resources shows a steady revenue growth with a 2.3% increase from the previous year. The Gross Profit Margin is healthy at 61.1%, indicating efficient cost management. However, the Net Profit Margin has decreased to 4.7%, reflecting challenges in converting revenue into net income. The EBIT and EBITDA margins are relatively stable, suggesting consistent operational efficiency.

Balance Sheet

Positive

The company maintains a reasonable Debt-to-Equity Ratio of 0.08, indicating low leverage. Return on Equity (ROE) is modest at 3.3%, which is lower than the industry average, suggesting room for improvement in profitability. The Equity Ratio is strong at 38.6%, demonstrating a solid capital structure and financial stability.

Cash Flow

Positive

The Free Cash Flow has decreased by 17.9% compared to the previous year, indicating a decline in cash generation. The Operating Cash Flow to Net Income Ratio is robust at 2.17, showing strong cash flow relative to earnings. However, the Free Cash Flow to Net Income Ratio is slightly lower at 1.61, suggesting some cash flow pressure.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
8.67B	8.48B	7.85B	8.28B	8.43B	5.57B
	Gross Profit
5.30B	3.98B	4.36B	3.34B	3.35B	1.99B
	EBIT
848.10M	407.60M	1.10B	1.77B	1.88B	1.05B
	EBITDA
1.26B	1.38B	1.95B	2.36B	2.84B	1.43B
	Net Income Common Stockholders
404.30M	464.80M	882.80M	1.29B	1.83B	798.90M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.65B	4.41B	4.40B	4.78B	4.65B	3.96B
	Total Assets
32.39B	32.46B	30.12B	28.06B	24.17B	20.22B
	Total Debt
12.78B	13.09B	11.75B	9.36B	7.59B	4.97B
	Net Debt
9.13B	8.68B	7.35B	4.58B	2.94B	1.01B
	Total Liabilities
17.05B	17.90B	16.55B	14.24B	11.42B	8.71B
	Stockholders Equity
12.46B	12.51B	11.92B	11.47B	11.22B	10.11B
Cash Flow		Free Cash Flow
652.30M	794.20M	989.90M	1.87B	1.17B	917.70M
	Operating Cash Flow
877.50M	971.30M	1.14B	1.96B	1.25B	1.02B
	Investing Cash Flow
-3.03B	-2.42B	-3.58B	-3.33B	-2.62B	-3.24B
	Financing Cash Flow
1.56B	1.42B	2.03B	1.58B	2.03B	194.20M

Franklin Resources Technical Analysis

Technical Analysis Sentiment

Positive

Last Price22.21

Price Trends

50DMA

19.55

Positive

100DMA

19.66

Positive

200DMA

19.91

Positive

Market Momentum

MACD

0.80

Negative

RSI

69.26

Neutral

STOCH

44.19

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BEN, the sentiment is Positive. The current price of 22.21 is above the 20-day moving average (MA) of 20.99, above the 50-day MA of 19.55, and above the 200-day MA of 19.91, indicating a bullish trend. The MACD of 0.80 indicates Negative momentum. The RSI at 69.26 is Neutral, neither overbought nor oversold. The STOCH value of 44.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for BEN.

Franklin Resources Risk Analysis

Franklin Resources disclosed 31 risk factors in its most recent earnings report. Franklin Resources reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Franklin Resources Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SEIC	82 Outperform	$10.70B	18.71	26.62%	1.13%	10.23%	26.56%
TROW	78 Outperform	$21.05B	10.84	19.47%	5.36%	6.51%	4.52%
IVZ	73 Outperform	$6.44B	11.52	5.50%	5.70%	5.69%	―
AMG	70 Outperform	$5.03B	13.90	12.81%	0.02%	-6.37%	-28.43%
CG	70 Outperform	$16.66B	15.59	20.38%	3.16%	62.87%	―
BEN	67 Neutral	$11.67B	32.17	2.84%	5.86%	7.02%	-60.38%
Sector *	64 Neutral	$12.67B	9.74	7.58%	17015.08%	12.21%	-6.96%

* Financial Sector Average

Performance Comparison

BEN

Franklin Resources

22.21

0.82

3.83%

AMG

Affiliated Managers

177.07

18.66

11.78%

IVZ

Invesco

14.76

0.34

2.36%

SEIC

SEI Investments Company

85.97

20.22

30.75%

TROW

T Rowe Price

95.56

-14.43

-13.12%

Carlyle Group

46.14

5.62

13.87%

Franklin Resources Corporate Events

Product-Related AnnouncementsBusiness Operations and StrategyFinancial Disclosures

Franklin Resources Reports Q1 2025 Financial Results

Positive

May 2, 2025

On May 2, 2025, Franklin Resources, Inc. reported its financial results for the quarter ended March 31, 2025, with a net income of $151.4 million, down from $163.6 million in the previous quarter but up from $124.2 million in the same quarter the previous year. Despite a challenging market environment, the company saw positive developments, including a 9% increase in long-term inflows and strong client demand for ETFs and private market assets. The firm also launched the Franklin Lexington Private Markets Fund, raising $2 billion in assets under management, and continued to expand its institutional pipeline, highlighting its strategic focus on innovation and client engagement.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.