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Will Robust Equity Markets Aid Franklin's (BEN) Q2 Earnings?
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Franklin Resources (BEN - Free Report) is scheduled to report second-quarter fiscal 2021 results, before the opening bell, on May 4. The company’s results are anticipated to reflect year-over-year increase in earnings and revenues.
In the last reported quarter, Franklin’s earnings surpassed the Zacks Consensus Estimate. The company’s results displayed revenue growth, with support from solid rise in investment management fees and higher assets under management (AUM). However, rise in expenses and net outflows were offsetting factors.
Franklin beat estimates in three of the trailing four quarters and missed in one, the average surprise being 16.16%.
The company’s activities during the fiscal second quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 74 cents has been unchanged over the past 30 days. The figure suggests growth of 12.1% from the year-ago reported number.
Strong Markets: Performance of equity markets was decent during the January-March quarter. The S&P 500 Index rallied 5.8% sequentially in the quarter. Moreover, the index measuring international equity performance — the MSCI EAFE — appreciated 3.8% sequentially. This is likely to have driven the California-based asset manager’s performance to an extent.
Higher AUM: Given Franklin’s AUM disclosure for March 2021 and favorable markets, its results are anticipated to reflect higher AUM. Nonetheless, the company might have recorded outflows despite improving fixed income and equity flows, due to seasonality.
The Zacks Consensus Estimate for total AUM for the to-be-reported quarter is $1.21 billion, implying a substantial rise year over year.
Solid Revenues: Investment management fees, which account for a significant portion of the company’s revenues, might have registered a rise during the fiscal second quarter. The consensus estimate for investment management fees of $1.53 billion indicates an increase of 68.2%, year over year. Furthermore, the consensus mark for quarterly sales and distribution fees is pegged at $405 million, suggesting 18.4% growth.
Overall, the Zacks Consensus Estimate for revenues of $2 billion indicates a year-over-year jump of 49.2%.
Controlled Expenses: Following the 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. This might get reflected in the fiscal second-quarter results as well.
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 -0.45%.
Zacks Rank: Franklin currently carries a Zacks Rank of 3.
Stocks Worth a Look
Here are some finance stocks 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.
Regional Management Corp. (RM - Free Report) has an Earnings ESP of +3.39% and a Zacks Rank #2 (Buy). It is expected to report results on May 4.
Virtu Financial, Inc. (VIRT - Free Report) has an Earnings ESP of +3.26% and a Zacks Rank #2. It is expected to report results on May 4.
Breakout Biotech Stocks with Triple-Digit Profit Potential
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Will Robust Equity Markets Aid Franklin's (BEN) Q2 Earnings?
Franklin Resources (BEN - Free Report) is scheduled to report second-quarter fiscal 2021 results, before the opening bell, on May 4. The company’s results are anticipated to reflect year-over-year increase in earnings and revenues.
In the last reported quarter, Franklin’s earnings surpassed the Zacks Consensus Estimate. The company’s results displayed revenue growth, with support from solid rise in investment management fees and higher assets under management (AUM). However, rise in expenses and net outflows were offsetting factors.
Franklin beat estimates in three of the trailing four quarters and missed in one, the average surprise being 16.16%.
The company’s activities during the fiscal second quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 74 cents has been unchanged over the past 30 days. The figure suggests growth of 12.1% from the year-ago reported number.
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 January-March quarter. The S&P 500 Index rallied 5.8% sequentially in the quarter. Moreover, the index measuring international equity performance — the MSCI EAFE — appreciated 3.8% sequentially. This is likely to have driven the California-based asset manager’s performance to an extent.
Higher AUM: Given Franklin’s AUM disclosure for March 2021 and favorable markets, its results are anticipated to reflect higher AUM. Nonetheless, the company might have recorded outflows despite improving fixed income and equity flows, due to seasonality.
The Zacks Consensus Estimate for total AUM for the to-be-reported quarter is $1.21 billion, implying a substantial rise year over year.
Solid Revenues: Investment management fees, which account for a significant portion of the company’s revenues, might have registered a rise during the fiscal second quarter. The consensus estimate for investment management fees of $1.53 billion indicates an increase of 68.2%, year over year. Furthermore, the consensus mark for quarterly sales and distribution fees is pegged at $405 million, suggesting 18.4% growth.
Overall, the Zacks Consensus Estimate for revenues of $2 billion indicates a year-over-year jump of 49.2%.
Controlled Expenses: Following the 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. This might get reflected in the fiscal second-quarter results as well.
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 -0.45%.
Zacks Rank: Franklin currently carries a Zacks Rank of 3.
Stocks Worth a Look
Here are some finance stocks 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.
Victory Capital Holdings, Inc. (VCTR - Free Report) is slated to release results on May 6. It has an Earnings ESP of +0.53% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Regional Management Corp. (RM - Free Report) has an Earnings ESP of +3.39% and a Zacks Rank #2 (Buy). It is expected to report results on May 4.
Virtu Financial, Inc. (VIRT - Free Report) has an Earnings ESP of +3.26% and a Zacks Rank #2. It is expected to report results on May 4.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>