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Franklin Resources (BEN)
:BEN
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Franklin Resources
(NYSE:BEN)
Rating:67Neutral
Price Target:―
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
$11.30B
Dividend Yield5.86%
Average Volume (3M)4.63M
Price to Earnings (P/E)31.2
Beta (1Y)1.04
Revenue Growth7.02%
EPS Growth-60.38%
CountryUS
Employees10,000
SectorFinancial
Sector Strength82
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 Cap1.83
Enterprise Value/Revenue0.61
Enterprise Value/Gross Profit3.90
Enterprise Value/Ebitda3.51
Forecast
1Y Price Target
$19.80Price Target Upside-7.95% 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 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
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.75
Positive
Balance Sheet
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.70
Positive
Cash Flow
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.68
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| 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
Positive
21.51
Price Trends
19.49
Positive
19.63
Positive
19.90
Positive
Market Momentum
0.80
Negative
63.05
Neutral
32.25
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 21.51 is above the 20-day moving average (MA) of 20.82, above the 50-day MA of 19.49, and above the 200-day MA of 19.90, indicating a bullish trend. The MACD of 0.80 indicates Negative momentum. The RSI at 63.05 is Neutral, neither overbought nor oversold. The STOCH value of 32.25 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 |
|---|---|---|---|---|---|---|---|
82 Outperform | $10.45B | 18.27 | 26.62% | 1.13% | 10.23% | 26.56% | |
78 Outperform | $20.49B | 10.56 | 19.47% | 5.36% | 6.51% | 4.52% | |
73 Outperform | $6.44B | 11.52 | 5.50% | 5.70% | 5.69% | ― | |
70 Outperform | $4.95B | 13.65 | 12.81% | 0.02% | -6.37% | -28.43% | |
70 Outperform | $15.99B | 14.95 | 20.38% | 3.16% | 62.87% | ― | |
67 Neutral | $11.30B | 31.15 | 2.84% | 5.86% | 7.02% | -60.38% | |
64 Neutral | $12.67B | 9.74 | 7.58% | 17015.08% | 12.21% | -6.96% |
* Financial Sector Average
Performance Comparison
BEN
Franklin Resources
22.21
0.51
2.35%
AMG
Affiliated Managers
173.97
14.07
8.80%
IVZ
Invesco
14.76
0.04
0.27%
SEIC
SEI Investments Company
83.92
17.86
27.04%
TROW
T Rowe Price
95.56
-15.45
-13.92%
CG
Carlyle Group
44.27
2.43
5.81%
Franklin Resources Earnings Call Summary
Earnings Call Date:May 02, 2025
(Q2-2025)
| % Change Since: 14.78%|
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 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.