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Will Robust Equity Markets Aid Franklin's (BEN) Q1 Earnings?
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Franklin Resources (BEN - Free Report) is scheduled to report first-quarter fiscal 2021 results, before the opening bell on Feb 2. The company’s results are anticipated to reflect year-over-year increases in earnings and revenues.
In the last reported quarter, Franklin’s results lagged the Zacks Consensus Estimate. The company’s results displayed rise in expenses and net outflows. However, revenue growth, with support from solid rise in investment management fees and higher AUM, were positives.
Franklin beat estimates in three of the trailing four quarters and missed in the other, the average surprise being 16.93%.
Also, the company’s activities during the fiscal first quarter were adequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 72 cents has been revised upward over the last 30 days. In addition, the figure suggests year-over-year growth of 2.86%.
Strong Markets: Performance of equity markets was decent during the October-December quarter despite the coronavirus crisis. The S&P 500 Index rallied 11.7% sequentially in the quarter. Moreover, the index measuring international equity performance — the MSCI EAFE — appreciated 16.05% sequentially. This is likely to have driven the California-based asset manager’s performance to a large extent in the quarter to be reported.
Higher AUM: Given Franklin’s AUM disclosure for December 2020 and favorable foreign-currency fluctuations, its results are anticipated to reflect a higher AUM, on a sequential basis. Nonetheless, the company might have recorded outflows despite improving fixed income and equity flows, due to seasonality.
Per the Zacks Consensus Estimate, total AUM for the to-be-reported quarter is projected to be up 51.6% to $1.06 billion year over year. Net flows are likely to be negative with $23.97 billion.
Solid Revenues: Investment management fees, which account for a significant portion of the company’s revenues, might have registered a rise during the fiscal first quarter. The consensus estimate for investment management fees of $1.5 billion indicates an increase of 15.4%, quarter on quarter. Furthermore, quarterly sales and distribution fees are projected to display 9.5% sequential growth to $402 million.
Overall, the Zacks Consensus Estimate for revenues of $1.96 billion calls for a year-over-year jump of 38.8%.
Controlled Expenses: Post addition of Legg Mason, the company is on track to realize $300 million of gross synergies with 85% of run rate savings likely to be realized by the end of fiscal 2021, which might get reflected in the fiscal first-quarter results.
Let’s have a look at what our quantitative model predicts:
Franklin does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Franklin is 0.00%.
Zacks Rank: Franklin currently carries a Zacks Rank of 2 (Buy), which increases the predictive power of ESP. But we also need to have a positive ESP to be confident of a positive earnings surprise.
Stocks Worth a Look
Here are a few finance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
PennyMac Financial Services, Inc. (PFSI - Free Report) is likely to release earnings figures around Feb 4. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +13.07%.
The Carlyle Group L.P. (CG - Free Report) is scheduled to announce quarterly results on Feb 4. The company has an Earnings ESP of +0.16% and currently holds a Zacks Rank of 3.
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Will Robust Equity Markets Aid Franklin's (BEN) Q1 Earnings?
Franklin Resources (BEN - Free Report) is scheduled to report first-quarter fiscal 2021 results, before the opening bell on Feb 2. The company’s results are anticipated to reflect year-over-year increases in earnings and revenues.
In the last reported quarter, Franklin’s results lagged the Zacks Consensus Estimate. The company’s results displayed rise in expenses and net outflows. However, revenue growth, with support from solid rise in investment management fees and higher AUM, were positives.
Franklin beat estimates in three of the trailing four quarters and missed in the other, the average surprise being 16.93%.
Also, the company’s activities during the fiscal first quarter were adequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 72 cents has been revised upward over the last 30 days. In addition, the figure suggests year-over-year growth of 2.86%.
Franklin Resources, Inc. Price and EPS Surprise
Franklin Resources, Inc. price-eps-surprise | Franklin Resources, Inc. Quote
Factors to Note
Strong Markets: Performance of equity markets was decent during the October-December quarter despite the coronavirus crisis. The S&P 500 Index rallied 11.7% sequentially in the quarter. Moreover, the index measuring international equity performance — the MSCI EAFE — appreciated 16.05% sequentially. This is likely to have driven the California-based asset manager’s performance to a large extent in the quarter to be reported.
Higher AUM: Given Franklin’s AUM disclosure for December 2020 and favorable foreign-currency fluctuations, its results are anticipated to reflect a higher AUM, on a sequential basis. Nonetheless, the company might have recorded outflows despite improving fixed income and equity flows, due to seasonality.
Per the Zacks Consensus Estimate, total AUM for the to-be-reported quarter is projected to be up 51.6% to $1.06 billion year over year. Net flows are likely to be negative with $23.97 billion.
Solid Revenues: Investment management fees, which account for a significant portion of the company’s revenues, might have registered a rise during the fiscal first quarter. The consensus estimate for investment management fees of $1.5 billion indicates an increase of 15.4%, quarter on quarter. Furthermore, quarterly sales and distribution fees are projected to display 9.5% sequential growth to $402 million.
Overall, the Zacks Consensus Estimate for revenues of $1.96 billion calls for a year-over-year jump of 38.8%.
Controlled Expenses: Post addition of Legg Mason, the company is on track to realize $300 million of gross synergies with 85% of run rate savings likely to be realized by the end of fiscal 2021, which might get reflected in the fiscal first-quarter results.
Let’s have a look at what our quantitative model predicts:
Franklin does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Franklin is 0.00%.
Zacks Rank: Franklin currently carries a Zacks Rank of 2 (Buy), which increases the predictive power of ESP. But we also need to have a positive ESP to be confident of a positive earnings surprise.
Stocks Worth a Look
Here are a few finance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Earnings ESP for Ellington Financial Inc. (EFC - Free Report) is +5.00% and the stock carries a Zacks Rank of 2, at present. The company is expected to report fourth-quarter numbers around Feb 10. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PennyMac Financial Services, Inc. (PFSI - Free Report) is likely to release earnings figures around Feb 4. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +13.07%.
The Carlyle Group L.P. (CG - Free Report) is scheduled to announce quarterly results on Feb 4. The company has an Earnings ESP of +0.16% and currently holds a Zacks Rank of 3.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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