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Franklin (BEN) Q3 Earnings & Revenues Surpass Estimates
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Franklin Resources Inc. (BEN - Free Report) has reported third-quarter fiscal 2023 (ended Jun 30) adjusted earnings of 63 cents per share, which beat the Zacks Consensus Estimate of 60 cents. However, the bottom line declined 23% from the prior-year quarter.
While a rise in assets under management (AUM) was a tailwind, BEN’s results have displayed top-line weakness in the quarter. Rising expenses affected the bottom line to some extent.
Net incomeattributable to BEN was $227.5 million, down 11% year over year. Our estimate for the metric was $163.5 million.
Revenues Fall on Low Investment Management Fees, Costs Rise
Total operating revenues declined 3% year over year to $1.97 billion in the fiscal third quarter on lower investment management fees. Nonetheless, the reported figure outpaced the Zacks Consensus Estimate of $1.90 billion.
Investment management fees fell 1% year over year to $1.61 billion. We projected the same to be $1.43 billion. Higher AUM likely aided the company in posting higher investment management fees. Sales and distribution fees were 9% down to $304 million. We projected the same to be $278.3 million.
Shareholder-servicing fees declined 17% on a year-over-year basis to $38.8 million. We projected the same to be $38.1 million. Other revenues were up 1% to $12.8 million.
Total operating expenses rose 2% year over year to $1.65 billion. We projected the same to be $1.53 billion, but higher compensation and benefits expenses led the company to post higher numbers.
Franklin reported an operating margin of 16% compared with 19.9% in the year-ago quarter.
AUM Rises
As of Jun 30, 2023, total AUM was $1.43 trillion, up 1% sequentially. We projected the same to be $1.41 trillion.
Franklin’s long-term net flows were $0.2 billion in the reported quarter.
Average AUM was $1.41 trillion, up marginally sequentially.
Capital Position
As of Jun 30, 2023, cash and cash equivalents, and investments were $6 billion, while total stockholders' equity was $12.5 billion.
In the reported quarter, Franklin repurchased 2 million shares for $50.9 million.
Our Viewpoint
The company’s efforts to diversify its business into asset classes that are seeing growing client demand will likely propel AUM growth. Its acquisitions expanded alternative investments and multi-asset solution platforms.
However, a challenging operating backdrop and several geopolitical concerns may significantly affect its AUM. Due to the focus on technological upgrades, costs may rise and weigh on bottom-line growth.
Franklin Resources, Inc. Price, Consensus and EPS Surprise
Ameriprise Financial’s (AMP - Free Report) second-quarter 2023 adjusted operating earnings of $7.44 per share handily surpassed the Zacks Consensus Estimate of $7.29. The bottom line reflects a rise of 30% from the year-ago quarter.
AMP’s results were aided by growth in revenues, along with higher AUM and assets under administration balances. However, increased expenses were headwinds.
SEI Investments Co.’s (SEIC - Free Report) second-quarter 2023 earnings of 89 cents per share beat the Zacks Consensus Estimate of 85 cents. The bottom line reflects a rise of 10% from the prior-year quarter.
SEIC’s results benefited from higher revenues and an increase in the AUM balance. However, rising expenses acted as an undermining factor forSEI Investments.
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Franklin (BEN) Q3 Earnings & Revenues Surpass Estimates
Franklin Resources Inc. (BEN - Free Report) has reported third-quarter fiscal 2023 (ended Jun 30) adjusted earnings of 63 cents per share, which beat the Zacks Consensus Estimate of 60 cents. However, the bottom line declined 23% from the prior-year quarter.
While a rise in assets under management (AUM) was a tailwind, BEN’s results have displayed top-line weakness in the quarter. Rising expenses affected the bottom line to some extent.
Net incomeattributable to BEN was $227.5 million, down 11% year over year. Our estimate for the metric was $163.5 million.
Revenues Fall on Low Investment Management Fees, Costs Rise
Total operating revenues declined 3% year over year to $1.97 billion in the fiscal third quarter on lower investment management fees. Nonetheless, the reported figure outpaced the Zacks Consensus Estimate of $1.90 billion.
Investment management fees fell 1% year over year to $1.61 billion. We projected the same to be $1.43 billion. Higher AUM likely aided the company in posting higher investment management fees. Sales and distribution fees were 9% down to $304 million. We projected the same to be $278.3 million.
Shareholder-servicing fees declined 17% on a year-over-year basis to $38.8 million. We projected the same to be $38.1 million. Other revenues were up 1% to $12.8 million.
Total operating expenses rose 2% year over year to $1.65 billion. We projected the same to be $1.53 billion, but higher compensation and benefits expenses led the company to post higher numbers.
Franklin reported an operating margin of 16% compared with 19.9% in the year-ago quarter.
AUM Rises
As of Jun 30, 2023, total AUM was $1.43 trillion, up 1% sequentially. We projected the same to be $1.41 trillion.
Franklin’s long-term net flows were $0.2 billion in the reported quarter.
Average AUM was $1.41 trillion, up marginally sequentially.
Capital Position
As of Jun 30, 2023, cash and cash equivalents, and investments were $6 billion, while total stockholders' equity was $12.5 billion.
In the reported quarter, Franklin repurchased 2 million shares for $50.9 million.
Our Viewpoint
The company’s efforts to diversify its business into asset classes that are seeing growing client demand will likely propel AUM growth. Its acquisitions expanded alternative investments and multi-asset solution platforms.
However, a challenging operating backdrop and several geopolitical concerns may significantly affect its AUM. Due to the focus on technological upgrades, costs may rise and weigh on bottom-line growth.
Franklin Resources, Inc. Price, Consensus and EPS Surprise
Franklin Resources, Inc. price-consensus-eps-surprise-chart | Franklin Resources, Inc. Quote
Currently, Franklin carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
Ameriprise Financial’s (AMP - Free Report) second-quarter 2023 adjusted operating earnings of $7.44 per share handily surpassed the Zacks Consensus Estimate of $7.29. The bottom line reflects a rise of 30% from the year-ago quarter.
AMP’s results were aided by growth in revenues, along with higher AUM and assets under administration balances. However, increased expenses were headwinds.
SEI Investments Co.’s (SEIC - Free Report) second-quarter 2023 earnings of 89 cents per share beat the Zacks Consensus Estimate of 85 cents. The bottom line reflects a rise of 10% from the prior-year quarter.
SEIC’s results benefited from higher revenues and an increase in the AUM balance. However, rising expenses acted as an undermining factor forSEI Investments.