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Weak Equity Markets to Impact Franklin's (BEN) Q1 Earnings
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Franklin Resources, Inc. (BEN - Free Report) is scheduled to report first-quarter fiscal 2019 results, before the opening bell on Jan 30. The company’s results are projected to reflect year-over-year fall in earnings and revenues.
In the last reported quarter, Franklin’s results surpassed the Zacks Consensus Estimate. Controlled expenses were reflected in the quarter. However, lower revenues and reduced assets under management (AUM) were recorded. Net outflows were also an undermining factor.
Further, Franklin recorded positive earnings surprise in three out of the trailing four quarters, average beat being 7.02%.
Nevertheless, activities of the company in the fiscal first quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 64 remained unchanged over the last seven days. Also, the figure reflects year-over-year fall of 27.3%.
Earnings Whispers
According to our proven model, we cannot conclusively predict if Franklin will likely beat the Zacks Consensus Estimate this time. That’s because it doesn’t have the right combination of the two key ingredients — positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase 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 company has an Earnings ESP of 0.00%.
Zacks Rank: Franklin’s Zacks Rank of 5 (Strong Sell) decreases the predictive power of ESP.
It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors to Influence Q1 Results
Weak Markets: Performance of equity markets remained unimpressive during the Oct-Dec quarter. The S&P 500 Index declined nearly 6.2% year over year and 14% sequentially in the quarter. Moreover, the index measuring international equity performance — the MSCI EAFE — decreased 13.4% year over year and 12.5% sequentially. This is anticipated to likely impact the California-based asset manager to a large extent.
Lower AUM: Given Franklin’s AUM disclosure for December 2018 and unfavorable foreign currency fluctuations, its results are predicted to display lower AUM, on a sequential basis. In addition, the company is expected to record outflows mainly tied with U.S. and non-U.S. mutual funds. Moreover, disappointing equity markets performance is likely to be a headwind.
Per the Zacks Consensus Estimate, total AUM for the to-be-reported quarter will likely slip 5.4% to $678 million sequentially.
Revenues to Disappoint: Investment management fees, which mark a significant portion of the company’s revenues, might reflect a dip in the first quarter. The consensus estimate for investment management fees of $1.02 billion indicates nearly 8.1% year-over-year decline. Furthermore, sales and distribution fees are projected to be down 11% year over year to $372 million in the quarter to be reported.
Overall, the Zacks Consensus Estimate for revenues of $1.4 billion indicates a year-over-year fall of 11.3%.
Controlled Expenses: Management remains focused on effective cost control. In the fiscal first quarter, a drop in expenses is anticipated due to information systems and technology and general, administrative and other expenses, which experience seasonality to some extent.
Stocks That Warrant a Look
Here are some stocks you may want to consider, as according to our model these have the right combination of elements to post an earnings beat this quarter.
BOK Financial Corporation (BOKF - Free Report) has an Earnings ESP of +1.08% and holds a Zacks Rank of 3. It is slated to report December quarter-end results on Jan 30.
Credit Acceptance Corporation (CACC - Free Report) has an Earnings ESP of +0.21% and carries a Zacks Rank #3. It is expected to report quarterly numbers on Jan 30.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Weak Equity Markets to Impact Franklin's (BEN) Q1 Earnings
Franklin Resources, Inc. (BEN - Free Report) is scheduled to report first-quarter fiscal 2019 results, before the opening bell on Jan 30. The company’s results are projected to reflect year-over-year fall in earnings and revenues.
In the last reported quarter, Franklin’s results surpassed the Zacks Consensus Estimate. Controlled expenses were reflected in the quarter. However, lower revenues and reduced assets under management (AUM) were recorded. Net outflows were also an undermining factor.
Further, Franklin recorded positive earnings surprise in three out of the trailing four quarters, average beat being 7.02%.
Franklin Resources, Inc. Price and EPS Surprise
Franklin Resources, Inc. Price and EPS Surprise | Franklin Resources, Inc. Quote
Nevertheless, activities of the company in the fiscal first quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 64 remained unchanged over the last seven days. Also, the figure reflects year-over-year fall of 27.3%.
Earnings Whispers
According to our proven model, we cannot conclusively predict if Franklin will likely beat the Zacks Consensus Estimate this time. That’s because it doesn’t have the right combination of the two key ingredients — positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase 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 company has an Earnings ESP of 0.00%.
Zacks Rank: Franklin’s Zacks Rank of 5 (Strong Sell) decreases the predictive power of ESP.
It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors to Influence Q1 Results
Weak Markets: Performance of equity markets remained unimpressive during the Oct-Dec quarter. The S&P 500 Index declined nearly 6.2% year over year and 14% sequentially in the quarter. Moreover, the index measuring international equity performance — the MSCI EAFE — decreased 13.4% year over year and 12.5% sequentially. This is anticipated to likely impact the California-based asset manager to a large extent.
Lower AUM: Given Franklin’s AUM disclosure for December 2018 and unfavorable foreign currency fluctuations, its results are predicted to display lower AUM, on a sequential basis. In addition, the company is expected to record outflows mainly tied with U.S. and non-U.S. mutual funds. Moreover, disappointing equity markets performance is likely to be a headwind.
Per the Zacks Consensus Estimate, total AUM for the to-be-reported quarter will likely slip 5.4% to $678 million sequentially.
Revenues to Disappoint: Investment management fees, which mark a significant portion of the company’s revenues, might reflect a dip in the first quarter. The consensus estimate for investment management fees of $1.02 billion indicates nearly 8.1% year-over-year decline. Furthermore, sales and distribution fees are projected to be down 11% year over year to $372 million in the quarter to be reported.
Overall, the Zacks Consensus Estimate for revenues of $1.4 billion indicates a year-over-year fall of 11.3%.
Controlled Expenses: Management remains focused on effective cost control. In the fiscal first quarter, a drop in expenses is anticipated due to information systems and technology and general, administrative and other expenses, which experience seasonality to some extent.
Stocks That Warrant a Look
Here are some stocks you may want to consider, as according to our model these have the right combination of elements to post an earnings beat this quarter.
Ares Capital Corporation (ARCC - Free Report) is slated to release results on Feb 12. The company has an Earnings ESP of +1.10% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
BOK Financial Corporation (BOKF - Free Report) has an Earnings ESP of +1.08% and holds a Zacks Rank of 3. It is slated to report December quarter-end results on Jan 30.
Credit Acceptance Corporation (CACC - Free Report) has an Earnings ESP of +0.21% and carries a Zacks Rank #3. It is expected to report quarterly numbers on Jan 30.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>