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Here's Why Franklin (BEN) is a Wise Investment Pick Now
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It seems appropriate to invest in Franklin Resources, Inc. (BEN - Free Report) stock right now. The company’s strong fundamentals and rising assets under management (AUM) make it a promising pick.
Moreover, Franklin has been making inorganic growth moves to enhance its foothold and expand service offerings. These acquisitions will support the company in improving and expanding its alternative investment and multi-asset solution platforms, thereby providing world-class investment solutions to clients.
The company’s price performance also seems decent. The stock has gained 14.6% over the past three months, outperforming the industry’s growth of 9.3%.
Three Months' Price Performance
Image Source: Zacks Investment Research
What Makes Franklin Attractive?
Organic Growth: Franklin holds organic growth prospects in several areas. The company’s relatively strong distribution platform has increased diversification in flows across funds, vehicles and asset classes as well as key businesses growth. Also, being an early entrant in many foreign markets, it enjoys a first-mover advantage.
Inorganic Moves: Over the past few years, Franklin has expanded through acquisitions, thereby, enhancing its foothold. In November, in a bid to bulk up its offerings in the alternative investment space, the company inked an agreement to acquire Lexington Partners, complementing its existing prowess in real estate, private credit, and hedge fund strategies.
In October, it announced the acquisition of O’Shaughnessy Asset Management, LLC, further enhancing its presence in the separately managed account (SMA) space. Franklin also concluded the all-cash acquisition of Legg Mason in July 2020. The strategic and financial benefits from the acquisition exceeded the firm’s targets, and augmented its growth opportunities.
AUM: Franklin’s rising AUM is a positive. The company witnessed a rising trend, seeing a CAGR of 19.4% over the last five years (ended fiscal 2021). Though BEN’s net outflows persist, the Legg Mason acquisition and several other efforts are likely to keep supporting AUM growth. This, in turn, will support the company’s top-line growth.
Valuation: Franklin looks undervalued right now compared with its broader industry. It currently has a price-to-earnings ratio of 9.62, lower than the industry average of 11.49. Also, its price-to-sales ratio of 2.03 is below the industry’s 3.08.
Other Stocks Worth a Look
A few other top-ranked stocks from the same space are Hamilton Lane (HLNE - Free Report) , KKR & Co. (KKR - Free Report) and Affiliated Managers Group (AMG - Free Report) . All three companies sport a Zacks Rank #1 at present.
The Zacks Consensus Estimate for Hamilton Lane’s current-year earnings has been unchanged over the past 30 days. HLNE’s shares have risen 37.7% in the past year.
Earnings estimates for KKR have moved marginally upward for 2021 over the past 30 days. Over the past year, KKR’s shares have rallied 93.3%.
Affiliated Managers recorded a marginal upward earnings estimate revision for 2021 over the past 30 days. The AMG stock has rallied 64.5% in the past year.
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Here's Why Franklin (BEN) is a Wise Investment Pick Now
It seems appropriate to invest in Franklin Resources, Inc. (BEN - Free Report) stock right now. The company’s strong fundamentals and rising assets under management (AUM) make it a promising pick.
Moreover, Franklin has been making inorganic growth moves to enhance its foothold and expand service offerings. These acquisitions will support the company in improving and expanding its alternative investment and multi-asset solution platforms, thereby providing world-class investment solutions to clients.
BEN currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The company’s price performance also seems decent. The stock has gained 14.6% over the past three months, outperforming the industry’s growth of 9.3%.
Three Months' Price Performance
What Makes Franklin Attractive?
Organic Growth: Franklin holds organic growth prospects in several areas. The company’s relatively strong distribution platform has increased diversification in flows across funds, vehicles and asset classes as well as key businesses growth. Also, being an early entrant in many foreign markets, it enjoys a first-mover advantage.
Inorganic Moves: Over the past few years, Franklin has expanded through acquisitions, thereby, enhancing its foothold. In November, in a bid to bulk up its offerings in the alternative investment space, the company inked an agreement to acquire Lexington Partners, complementing its existing prowess in real estate, private credit, and hedge fund strategies.
In October, it announced the acquisition of O’Shaughnessy Asset Management, LLC, further enhancing its presence in the separately managed account (SMA) space. Franklin also concluded the all-cash acquisition of Legg Mason in July 2020. The strategic and financial benefits from the acquisition exceeded the firm’s targets, and augmented its growth opportunities.
AUM: Franklin’s rising AUM is a positive. The company witnessed a rising trend, seeing a CAGR of 19.4% over the last five years (ended fiscal 2021). Though BEN’s net outflows persist, the Legg Mason acquisition and several other efforts are likely to keep supporting AUM growth. This, in turn, will support the company’s top-line growth.
Valuation: Franklin looks undervalued right now compared with its broader industry. It currently has a price-to-earnings ratio of 9.62, lower than the industry average of 11.49. Also, its price-to-sales ratio of 2.03 is below the industry’s 3.08.
Other Stocks Worth a Look
A few other top-ranked stocks from the same space are Hamilton Lane (HLNE - Free Report) , KKR & Co. (KKR - Free Report) and Affiliated Managers Group (AMG - Free Report) . All three companies sport a Zacks Rank #1 at present.
The Zacks Consensus Estimate for Hamilton Lane’s current-year earnings has been unchanged over the past 30 days. HLNE’s shares have risen 37.7% in the past year.
Earnings estimates for KKR have moved marginally upward for 2021 over the past 30 days. Over the past year, KKR’s shares have rallied 93.3%.
Affiliated Managers recorded a marginal upward earnings estimate revision for 2021 over the past 30 days. The AMG stock has rallied 64.5% in the past year.