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 Inc. (BEN - Free Report) reported fourth-quarter fiscal 2021 (ended Sep 30) adjusted earnings of $1.26 per share, which lagged the Zacks Consensus Estimate of 86 cents. Results also compare unfavorably with the earnings of 56 cents per share recorded in the prior-year quarter.
The company’s results display revenue growth with support from a solid rise in investment management fees during the quarter. Also, higher assets under management (AUM) was a positive. However, rise in expenses and net outflows were the undermining factors.
The adjusted operating income came in at $647.1 million in the reported quarter compared with the prior-year quarter’s $428.9 million.
For fiscal 2021, earnings per share were $3.57 compared with the $1.59 recorded in the prior year. Results include certain one-time items.
Including certain notable items, net income was $665.7 million or $1.3 per share compared with the $78.9 million or 15 cents per share in the prior-year quarter. For fiscal 2021, net income was $1.8 billion compa*red with the prior year’s $798.9million.
On Nov 1, Franklin inked an agreement to acquire Lexington Partners L.P., a domineering secondary private equity and co-investment funds’ global manager. This acquisition move will fortify Franklin’s alternative asset competencies, apart from complementing its current prowess in real estate, private credit, and hedge fund strategies. It comes at a time when investors are increasingly progressively stipulating capital across the huge arena of alternative asset offerings.
Quarterly Revenues Increase, Costs Rise
For fiscal 2021, total operating revenues surged 51% year over year to $8.4 billion. The revenue figure also beat the Zacks Consensus Estimate of $8.33 billion.
Total operating revenues increased 28% year over year to $2.18 billion in the fiscal fourth quarter on higher investment management, sales and distribution and other fees. The figure surpassed the Zacks Consensus Estimate of $2.12 billion.
Investment management fees climbed 33% year over year to $1.7 billion, while other revenues increased 48% to $11.8 million. Additionally, sales and distribution fees were up 11% year over year to $408.1 million. Shareholder servicing fees increased 22% to $55.6 million.
Total operating expenses flared up 3% year over year to $1.6 billion. This upside resulted from rise in all components of expenses, including compensation and benefits, general, administrative, amortization of intangible assets and other along with sales, distribution and marketing expenses.
As of Sep 30, 2021, total AUM came in at $1.53 trillion, up 8% from $1.42 trillion as of Sep 30, 2019. Notably, the company recorded net new outflows of $13.8 billion during the July-September quarter. Simple monthly average AUM of $1.55 trillion increased 26% year over year.
Improved Capital Position
As of Sep 30, 2021, cash and cash equivalents, along with investments, were $5.9 billion compared with $4.3 billion as of Sep 30, 2021. Furthermore, total stockholders' equity was $11.8 billion compared with $10.9 billion as of Sep 30, 2020.
Our Viewpoint
Franklin’s global footprint is an exceptionally favorable strategic point as its AUM is well diversified. Also, the company’s strategic moves might lend some support to the bottom line. Further, increased volatility amid the coronavirus crisis supported growth in investment-management fees.
Currently, Franklin carries a Zacks Rank #4 (Sell).
Franklin Resources, Inc. Price, Consensus and EPS Surprise
BlackRock, Inc.’s (BLK - Free Report) third-quarter 2021 adjusted earnings of $10.95 per share outpaced the Zacks Consensus Estimate of $9.63. The figure reflects a rise of 18.8% from the year-ago quarter’s number.
Blackstone’s (BX - Free Report) distributable earnings of $1.28 per share comfortably surpassed the Zacks Consensus Estimate of 93 cents for the July-September quarter. The figure reflects a significant rise from 63 cents recorded in the prior-year quarter.
SEI Investments Co.’s (SEIC - Free Report) earnings of 97 cents per share came in line with the Zacks Consensus Estimate for the September-end quarter. The bottom line reflected 29% growth from the prior-year quarter.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Franklin's (BEN) Q4 Earnings Beat Estimates, AUM Rises Y/Y
Franklin Resources Inc. (BEN - Free Report) reported fourth-quarter fiscal 2021 (ended Sep 30) adjusted earnings of $1.26 per share, which lagged the Zacks Consensus Estimate of 86 cents. Results also compare unfavorably with the earnings of 56 cents per share recorded in the prior-year quarter.
The company’s results display revenue growth with support from a solid rise in investment management fees during the quarter. Also, higher assets under management (AUM) was a positive. However, rise in expenses and net outflows were the undermining factors.
The adjusted operating income came in at $647.1 million in the reported quarter compared with the prior-year quarter’s $428.9 million.
For fiscal 2021, earnings per share were $3.57 compared with the $1.59 recorded in the prior year. Results include certain one-time items.
Including certain notable items, net income was $665.7 million or $1.3 per share compared with the $78.9 million or 15 cents per share in the prior-year quarter. For fiscal 2021, net income was $1.8 billion compa*red with the prior year’s $798.9million.
On Nov 1, Franklin inked an agreement to acquire Lexington Partners L.P., a domineering secondary private equity and co-investment funds’ global manager. This acquisition move will fortify Franklin’s alternative asset competencies, apart from complementing its current prowess in real estate, private credit, and hedge fund strategies. It comes at a time when investors are increasingly progressively stipulating capital across the huge arena of alternative asset offerings.
Quarterly Revenues Increase, Costs Rise
For fiscal 2021, total operating revenues surged 51% year over year to $8.4 billion. The revenue figure also beat the Zacks Consensus Estimate of $8.33 billion.
Total operating revenues increased 28% year over year to $2.18 billion in the fiscal fourth quarter on higher investment management, sales and distribution and other fees. The figure surpassed the Zacks Consensus Estimate of $2.12 billion.
Investment management fees climbed 33% year over year to $1.7 billion, while other revenues increased 48% to $11.8 million. Additionally, sales and distribution fees were up 11% year over year to $408.1 million. Shareholder servicing fees increased 22% to $55.6 million.
Total operating expenses flared up 3% year over year to $1.6 billion. This upside resulted from rise in all components of expenses, including compensation and benefits, general, administrative, amortization of intangible assets and other along with sales, distribution and marketing expenses.
As of Sep 30, 2021, total AUM came in at $1.53 trillion, up 8% from $1.42 trillion as of Sep 30, 2019. Notably, the company recorded net new outflows of $13.8 billion during the July-September quarter. Simple monthly average AUM of $1.55 trillion increased 26% year over year.
Improved Capital Position
As of Sep 30, 2021, cash and cash equivalents, along with investments, were $5.9 billion compared with $4.3 billion as of Sep 30, 2021. Furthermore, total stockholders' equity was $11.8 billion compared with $10.9 billion as of Sep 30, 2020.
Our Viewpoint
Franklin’s global footprint is an exceptionally favorable strategic point as its AUM is well diversified. Also, the company’s strategic moves might lend some support to the bottom line. Further, increased volatility amid the coronavirus crisis supported growth in investment-management fees.
Currently, Franklin carries a Zacks Rank #4 (Sell).
Franklin Resources, Inc. Price, Consensus and EPS Surprise
Franklin Resources, Inc. price-consensus-eps-surprise-chart | Franklin Resources, Inc. Quote
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
BlackRock, Inc.’s (BLK - Free Report) third-quarter 2021 adjusted earnings of $10.95 per share outpaced the Zacks Consensus Estimate of $9.63. The figure reflects a rise of 18.8% from the year-ago quarter’s number.
Blackstone’s (BX - Free Report) distributable earnings of $1.28 per share comfortably surpassed the Zacks Consensus Estimate of 93 cents for the July-September quarter. The figure reflects a significant rise from 63 cents recorded in the prior-year quarter.
SEI Investments Co.’s (SEIC - Free Report) earnings of 97 cents per share came in line with the Zacks Consensus Estimate for the September-end quarter. The bottom line reflected 29% growth from the prior-year quarter.