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Franklin Resources (BEN)
NYSE:BEN
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Franklin Resources
(NYSE:BEN)
67Neutral
Positive Factors
Expense Management
A significant expense save plan of $200-$250M was announced, which is expected to provide a boost to margins.
Growth Initiatives
Early traction in Putnam, retail alternatives, and ETFs suggests potential for business growth.
Product Innovation
Alternative products bring multiple benefits, such as improved flows, higher management fee rates, performance fees, and better stock valuation.
Negative Factors
Earnings Performance
Lowering adjusted EPS due to higher general and administrative and information services/tech expenses.
Market Performance
The shares have already outperformed in the recent market drawdown, limiting immediate upside potential.
Regulatory Challenges
Western Asset (WAM) has dominated the BEN story with negative headlines and large outflows, but key details help to ring-fence exposure.
Franklin Resources (BEN) vs. S&P 500 (SPY)
Market Cap
$9.86B
Dividend Yield6.72%
Average Volume (3M)4.85M
Price to Earnings (P/E)28.8
Beta (1Y)1.01
Revenue Growth9.48%
EPS Growth-65.57%
CountryUS
Employees10,100
SectorFinancial
Sector Strength87
IndustryAsset Management
Share Statistics
EPS (TTM)0.65
Shares Outstanding525,397,950
10 Day Avg. Volume3,474,531
30 Day Avg. Volume4,845,660
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap2.29
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit5.65
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$18.88Price Target Upside0.75% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering13
Franklin Resources Business Overview & Revenue Model
Company DescriptionFranklin Resources, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides its services to individuals, institutions, pension plans, trusts, and partnerships. It launches equity, fixed income, balanced, and multi-asset mutual funds through its subsidiaries. The firm invests in the public equity, fixed income, and alternative markets. Franklin Resources, Inc. was founded in 1947 and is based in San Mateo, California with an additional office in Hyderabad, India.
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 Financial Statement Overview
Summary
Franklin Resources demonstrates financial stability with strong cost management and effective cash conversion, but faces challenges in profitability and growth. The balance sheet is robust, with low leverage, but profitability metrics show room for improvement. The company should focus on enhancing net income and free cash flow growth to strengthen its financial position.Income Statement
Franklin Resources shows a mixed income statement performance. The TTM gross profit margin stands at 67.0%, indicating efficient cost management. However, the net profit margin is relatively low at 4.3%, suggesting downward pressure on profitability. Revenue growth rate from the previous year is 9.7%, showing moderate growth, but the declining EBIT and EBITDA margins reflect operational challenges.72
Positive
Balance Sheet
The company's balance sheet is strong with a low debt-to-equity ratio of 0.08, indicating conservative leverage. The equity ratio is 38.5%, highlighting a solid equity foundation. Return on equity is lower at 3.0%, reflecting weaker returns on shareholder investments. Overall, the balance sheet stability is a positive aspect, offset by suboptimal ROE.78
Positive
Cash Flow
Free cash flow growth is negative at -16.7%, reflecting challenges in cash generation. The operating cash flow to net income ratio of 2.80 indicates strong cash conversion, while the free cash flow to net income ratio is 2.19, showing effective free cash flow management. Despite strong cash conversion, declining free cash flow growth remains a concern.65
Positive
| Breakdown | ||||
| Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 8.48B | 7.85B | 8.28B | 8.43B | 5.57B | Gross Profit |
| 3.98B | 4.36B | 3.34B | 3.35B | 1.99B | EBIT |
| 407.60M | 1.10B | 1.77B | 1.88B | 1.05B | EBITDA |
| 796.80M | 1.95B | 2.36B | 2.84B | 1.43B | Net Income Common Stockholders |
| 464.80M | 882.80M | 1.29B | 1.83B | 798.90M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 3.31B | 4.40B | 4.78B | 4.65B | 3.96B | Total Assets |
| 32.46B | 30.12B | 28.06B | 24.17B | 20.22B | Total Debt |
| 965.10M | 11.75B | 9.36B | 7.59B | 4.97B | Net Debt |
| -2.34B | 7.35B | 4.58B | 2.94B | 1.01B | Total Liabilities |
| 17.90B | 16.55B | 14.24B | 11.42B | 8.71B | Stockholders Equity |
| 12.51B | 11.92B | 11.47B | 11.22B | 10.11B |
| Cash Flow | Free Cash Flow | |||
| 794.20M | 989.90M | 1.87B | 1.17B | 917.70M | Operating Cash Flow |
| 971.30M | 1.14B | 1.96B | 1.25B | 1.02B | Investing Cash Flow |
| -2.42B | -3.58B | -3.33B | -2.62B | -3.24B | Financing Cash Flow |
| 1.42B | 2.03B | 1.58B | 2.03B | 194.20M |
Franklin Resources Technical Analysis
Neutral
18.74
Price Trends
18.99
Negative
19.56
Negative
19.96
Negative
Market Momentum
-0.08
Negative
53.29
Neutral
85.27
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BEN, the sentiment is Neutral. The current price of 18.74 is above the 20-day moving average (MA) of 18.07, below the 50-day MA of 18.99, and below the 200-day MA of 19.96, indicating a neutral trend. The MACD of -0.08 indicates Negative momentum. The RSI at 53.29 is Neutral, neither overbought nor oversold. The STOCH value of 85.27 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $9.32B | 16.65 | 26.62% | 1.21% | 10.23% | 26.56% | |
74 Outperform | $19.68B | 9.67 | 20.60% | 5.62% | 9.80% | 17.87% | |
71 Outperform | $6.23B | 11.16 | 5.50% | 5.87% | 5.69% | ― | |
70 Outperform | $13.94B | 13.94 | 18.90% | 3.58% | 62.87% | ― | |
67 Neutral | $9.86B | 28.77 | 2.76% | 6.72% | 9.48% | -65.57% | |
64 Neutral | $4.80B | 11.05 | 14.75% | 0.02% | -6.77% | -14.55% | |
63 Neutral | $12.46B | 9.55 | 8.14% | 17103.96% | 12.70% | -4.66% |
* Financial Sector Average
Performance Comparison
BEN
Franklin Resources
18.74
-2.86
-13.24%
AMG
Affiliated Managers
165.63
5.02
3.13%
IVZ
Invesco
13.93
0.09
0.65%
SEIC
SEI Investments Company
78.24
12.52
19.05%
TROW
T Rowe Price
88.12
-17.96
-16.93%
CG
Carlyle Group
39.16
-0.21
-0.53%
Franklin Resources Earnings Call Summary
Earnings Call Date:Jan 31, 2025
(Q1-2025)
| % Change Since: -5.45%|
Next Earnings Date:May 02, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced picture with significant achievements in global expansion, alternative fundraising, ETF and SMA growth, and the success of the Putnam acquisition. However, these positives were offset by challenges with Western Asset Management, including substantial outflows and a decrease in adjusted operating income. Overall, the sentiment is mixed, reflecting both progress and ongoing difficulties.Q1-2025 Updates
Positive Updates
Positive Net Inflows
Excluding Western Asset Management, Franklin Resources reported long-term net inflows of approximately $18 billion, with positive flows in every asset class. Equity, Multi-Asset, and Alternatives generated a combined $17 billion in positive net flows.
Global Expansion and Partnerships
Franklin Templeton was appointed as trustee and manager of the National Investment Fund of Uzbekistan, expanding its reach in emerging markets and showcasing its global capabilities.
Alternatives Fundraising Success
Franklin Templeton's alternatives fundraising reached $6 billion in the quarter, with private market assets totaling $4.3 billion. The launch of the Franklin-Lexington Private Markets Fund achieved a fundraising cap of $900 million.
ETF and SMA Growth
The ETF business saw its 13th consecutive quarter of positive net flows, attracting $2.7 billion during Q1. Retail SMA AUM was $146 billion, with net inflows of $2.5 billion excluding Western.
Putnam Acquisition Success
The Putnam acquisition has been described as a 'home run,' with significant net new flows and strong performance, contributing $175 million to $180 million in operating income.
Strong Investment Performance
Two-thirds of mutual fund AUM outperformed their respective peers over the 3-year period, and more than half of AUM in strategy composites are beating their respective benchmarks for the 3 and 5-year periods.
Negative Updates
Western Asset Management Outflows
Western Asset Management experienced significantly higher long-term net outflows of $68 billion in the quarter, with an additional $17 billion in outflows expected for January.
Decrease in Adjusted Operating Income
Adjusted operating income decreased by 9% from the prior quarter to $412.8 million, indicating financial challenges despite strategic initiatives.
Decline in Fixed Income Net Flows
Fixed income net outflows were $66.7 billion, primarily due to challenges at Western Asset Management, impacting overall performance.
U.S. Equity Strategy Performance Decline
There was a modest decline in U.S. equity strategy performance over the 1-year period, affecting overall mutual fund investment performance.
Company Guidance
During the Franklin Resources earnings call for the fiscal quarter ended December 31, 2024, the company provided a detailed guidance on its financial and strategic outlook. The firm reported $1.58 trillion in assets under management (AUM), with a decrease from the previous quarter attributed to market downturns and net outflows, particularly from Western Asset Management. Excluding Western, the company saw $18 billion in long-term net inflows, with significant positive net flows in equity, multi-asset, and alternatives sectors, totaling $17 billion. The fixed income segment faced net outflows of $66.7 billion, though excluding Western, the segment achieved positive net inflows. Franklin Resources' investment performance remained strong, with two-thirds of mutual fund assets under management outperforming peers over a three-year period. The company highlighted its strategic focus on alternatives and wealth management, noting that its Evergreen funds reached nearly $1 billion each in AUM. Additionally, Franklin Resources is implementing cost-saving initiatives projected to lower expenses by $200 to $250 million by fiscal 2026, while maintaining a medium-term margin target of 30%.Franklin Resources Corporate Events
Financial Disclosures
Franklin Resources Reports Strong Quarterly Financial Recovery
Positive
Jan 31, 2025
Franklin Resources announced its financial results for the quarter ended December 31, 2024, reporting a net income of $163.6 million, a significant recovery from the previous quarter’s net loss of $84.7 million. The company highlighted a 34% improvement in long-term inflows from the prior year, achieving positive net flows in various investment categories, and an increase in won-but-unfunded mandates, showcasing its ability to adapt to market volatility and meet client needs.
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.