We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Franklin Resources (BEN) Up 9.1% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for Franklin Resources (BEN - Free Report) . Shares have added about 9.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Franklin Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Franklin Q4 Earnings & Revenues Top Estimates, AUM Falls
Franklin reported fourth-quarter fiscal 2023 adjusted earnings of 84 cents per share, which beat the Zacks Consensus Estimate of 60 cents. The bottom line increased 7.7% from the prior-year quarter.
Franklin’s results displayed top-line strength compared with the prior quarter. However, rising expenses affected the bottom line to some extent. A decline in AUM was another major drag.
Net income attributable to Franklin was $295.5 million, up 27% year over year.
For fiscal 2023, adjusted earnings per share were $2.60 compared with the $3.63 recorded in the prior year.
Revenues Fell, Expenses Rise
For fiscal 2023, total operating revenues fell 5.1% year over year to $7.85 billion. Yet, the top line surpassed the Zacks Consensus Estimate of $7.73 billion.
Total operating revenues improved 2.4% year over year to $1.99 billion in the fiscal fourth quarter on higher investment management fees. The reported figure also outpaced the Zacks Consensus Estimate of $1.87 billion.
Investment management fees rose 4% year over year to $1.63 billion.
However, sales and distribution fees declined 1.5% to $306.4 million. Shareholder-servicing fees plunged 19.5% on a year-over-year basis to $37.2 million. Other revenues fell 25% to $8.1 million.
Total operating expenses rose 3.6% year over year to $1.65 billion. The rise was due to an increase in almost all the components of operating expenses except lower general, administrative and other expenditures.
Franklin reported an operating margin of 17% compared with 18% in the year-ago quarter.
AUM Declines
As of Sep 30, 2023, total AUM was $1.37 trillion, down 4% sequentially. Franklin’s long-term net outflows were $6.9 billion in the reported quarter.
Average AUM was $1.42 trillion, which remained flat sequentially.
Capital Position
As of Sep 30, 2023, cash and cash equivalents, and investments were $5.9 billion, while total stockholders' equity was $12.5 billion.
In the reported quarter, Franklin repurchased 7 million shares for $187.6 million.
Outlook
First-Quarter Fiscal 2024
The company expects compensation and benefits to be approximately $750 million, including performance fees and accelerated deferred compensation charges of $35 million. It forecasts performance fees to be around $50 million.
Information systems and technology expenses are anticipated to be flat at around $125 million on a sequential basis.
Occupancy expenses are projected to be $65 million.
General, administrative and other expenses are estimated to be $140 million.
Fiscal 2024
The company expects to incur acquisition-related retention expenses of around $240 million.
Management anticipates GAAP tax rate in the range 24-26%.
Fiscal 2025 & 2026
Acquisition-related retention expenses is expected to decrease by approximately $80 million and $20 million in fiscal 2025 and 2026, respectively, compared with fiscal 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -7.62% due to these changes.
VGM Scores
Currently, Franklin Resources has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Franklin Resources has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Franklin Resources belongs to the Zacks Financial - Investment Management industry. Another stock from the same industry, Principal Financial (PFG - Free Report) , has gained 10.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Principal Financial reported revenues of $3.48 billion in the last reported quarter, representing a year-over-year change of +1%. EPS of $1.72 for the same period compares with $1.69 a year ago.
For the current quarter, Principal Financial is expected to post earnings of $1.69 per share, indicating a change of -0.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.2% over the last 30 days.
Principal Financial has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Franklin Resources (BEN) Up 9.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Franklin Resources (BEN - Free Report) . Shares have added about 9.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Franklin Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Franklin Q4 Earnings & Revenues Top Estimates, AUM Falls
Franklin reported fourth-quarter fiscal 2023 adjusted earnings of 84 cents per share, which beat the Zacks Consensus Estimate of 60 cents. The bottom line increased 7.7% from the prior-year quarter.
Franklin’s results displayed top-line strength compared with the prior quarter. However, rising expenses affected the bottom line to some extent. A decline in AUM was another major drag.
Net income attributable to Franklin was $295.5 million, up 27% year over year.
For fiscal 2023, adjusted earnings per share were $2.60 compared with the $3.63 recorded in the prior year.
Revenues Fell, Expenses Rise
For fiscal 2023, total operating revenues fell 5.1% year over year to $7.85 billion. Yet, the top line surpassed the Zacks Consensus Estimate of $7.73 billion.
Total operating revenues improved 2.4% year over year to $1.99 billion in the fiscal fourth quarter on higher investment management fees. The reported figure also outpaced the Zacks Consensus Estimate of $1.87 billion.
Investment management fees rose 4% year over year to $1.63 billion.
However, sales and distribution fees declined 1.5% to $306.4 million. Shareholder-servicing fees plunged 19.5% on a year-over-year basis to $37.2 million. Other revenues fell 25% to $8.1 million.
Total operating expenses rose 3.6% year over year to $1.65 billion. The rise was due to an increase in almost all the components of operating expenses except lower general, administrative and other expenditures.
Franklin reported an operating margin of 17% compared with 18% in the year-ago quarter.
AUM Declines
As of Sep 30, 2023, total AUM was $1.37 trillion, down 4% sequentially. Franklin’s long-term net outflows were $6.9 billion in the reported quarter.
Average AUM was $1.42 trillion, which remained flat sequentially.
Capital Position
As of Sep 30, 2023, cash and cash equivalents, and investments were $5.9 billion, while total stockholders' equity was $12.5 billion.
In the reported quarter, Franklin repurchased 7 million shares for $187.6 million.
Outlook
First-Quarter Fiscal 2024
The company expects compensation and benefits to be approximately $750 million, including performance fees and accelerated deferred compensation charges of $35 million. It forecasts performance fees to be around $50 million.
Information systems and technology expenses are anticipated to be flat at around $125 million on a sequential basis.
Occupancy expenses are projected to be $65 million.
General, administrative and other expenses are estimated to be $140 million.
Fiscal 2024
The company expects to incur acquisition-related retention expenses of around $240 million.
Management anticipates GAAP tax rate in the range 24-26%.
Fiscal 2025 & 2026
Acquisition-related retention expenses is expected to decrease by approximately $80 million and $20 million in fiscal 2025 and 2026, respectively, compared with fiscal 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -7.62% due to these changes.
VGM Scores
Currently, Franklin Resources has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Franklin Resources has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Franklin Resources belongs to the Zacks Financial - Investment Management industry. Another stock from the same industry, Principal Financial (PFG - Free Report) , has gained 10.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Principal Financial reported revenues of $3.48 billion in the last reported quarter, representing a year-over-year change of +1%. EPS of $1.72 for the same period compares with $1.69 a year ago.
For the current quarter, Principal Financial is expected to post earnings of $1.69 per share, indicating a change of -0.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.2% over the last 30 days.
Principal Financial has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.