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What's in Store for Franklin Resources (BEN) in Q4 Earnings?
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Franklin Resources (BEN - Free Report) is scheduled to report fourth-quarter and fiscal 2017 results before the opening bell on Oct 26. While revenues are projected to improve year over year, earnings might decline.
Why a Likely Positive Surprise?
Our proven model shows that Franklin has a high chance of beating Q4 earnings estimates. This is because the company has the right combination of two key ingredients for a possible earnings beat — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: Currently, Franklin has an Earnings ESP of +0.56%.
Zacks Rank: Franklin currently carries a Zacks Rank of 2 (Buy).
Further, Franklin has an impressive earnings surprise history. It surpassed Zacks Consensus Estimate for earnings in three of the trailing four quarters, with an average positive surprise of 10.6%.
In the last quarter, the company reported in line earnings. Results reflected lower revenues and higher costs. Net outflows in the quarter were another headwind. However, increase in assets under management (AUM) was a positive factor.
Strong Market Performance to Benefit Franklin: Performance of equity markets remained strong in the July-September quarter. The S&P 500 Index gained nearly 4% in the quarter. Moreover, the index measuring international equity performance — the MSCI EAFE — climbed around 5%. This should benefit this California-based asset manager.
Higher AUM: Given Franklin’s AUM disclosure for September 2017 and equity market rally, the results are expected to display higher AUM on a year-over-year basis. Additionally, the company is expected to record inflows mainly tied with Global Fixed Income asset class, Global Equity and U.S. Equity. Per the Zacks Consensus Estimate, total AUM for the to-be-quarter is expected to rise 1.4% to $743 million on a year-over-year basis.
Increase in Revenues: Investment management fees, which marks a significant portion of the company’s revenues, might improve on the back of market strength. The consensus estimate for investment management fees of $1.1 billion reflects nearly 1% growth year over year. However, this increase is likely to be partially offset by sales and distribution fees which is projected to fall 0.7% year over year to $438 million in the to-be-reported quarter.
Overall, the Zacks Consensus Estimate for revenues of $1.64 billion indicates a year-over-year increase of 1.6%.
Controlled Expenses: While Franklin expects information and technology expenses along with general and administrative costs to exhibit an uptick in the fiscal fourth quarter, compensation and benefits expenses are expected to decline.
However, the company’s cost-control efforts have been successful in trimming expenses so far this year. We expect these efforts to support bottom-line growth 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.
Lazard Ltd. (LAZ - Free Report) has an Earnings ESP of +1.39% and a Zacks Rank of 2. It is scheduled to report third-quarter results on Oct 26.
The Earnings ESP for Legg Mason, Inc. is +0.97% and it carries a Zacks Rank of 3. The company is slated to release third-quarter results on Oct 25.
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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What's in Store for Franklin Resources (BEN) in Q4 Earnings?
Franklin Resources (BEN - Free Report) is scheduled to report fourth-quarter and fiscal 2017 results before the opening bell on Oct 26. While revenues are projected to improve year over year, earnings might decline.
Why a Likely Positive Surprise?
Our proven model shows that Franklin has a high chance of beating Q4 earnings estimates. This is because the company has the right combination of two key ingredients for a possible earnings beat — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: Currently, Franklin has an Earnings ESP of +0.56%.
Zacks Rank: Franklin currently carries a Zacks Rank of 2 (Buy).
Further, Franklin has an impressive earnings surprise history. It surpassed Zacks Consensus Estimate for earnings in three of the trailing four quarters, with an average positive surprise of 10.6%.
In the last quarter, the company reported in line earnings. Results reflected lower revenues and higher costs. Net outflows in the quarter were another headwind. However, increase in assets under management (AUM) was a positive factor.
Franklin Resources, Inc. Price and EPS Surprise
Franklin Resources, Inc. Price and EPS Surprise | Franklin Resources, Inc. Quote
Factors That Might Influence Q4 Results
Strong Market Performance to Benefit Franklin: Performance of equity markets remained strong in the July-September quarter. The S&P 500 Index gained nearly 4% in the quarter. Moreover, the index measuring international equity performance — the MSCI EAFE — climbed around 5%. This should benefit this California-based asset manager.
Higher AUM: Given Franklin’s AUM disclosure for September 2017 and equity market rally, the results are expected to display higher AUM on a year-over-year basis. Additionally, the company is expected to record inflows mainly tied with Global Fixed Income asset class, Global Equity and U.S. Equity. Per the Zacks Consensus Estimate, total AUM for the to-be-quarter is expected to rise 1.4% to $743 million on a year-over-year basis.
Increase in Revenues: Investment management fees, which marks a significant portion of the company’s revenues, might improve on the back of market strength. The consensus estimate for investment management fees of $1.1 billion reflects nearly 1% growth year over year. However, this increase is likely to be partially offset by sales and distribution fees which is projected to fall 0.7% year over year to $438 million in the to-be-reported quarter.
Overall, the Zacks Consensus Estimate for revenues of $1.64 billion indicates a year-over-year increase of 1.6%.
Controlled Expenses: While Franklin expects information and technology expenses along with general and administrative costs to exhibit an uptick in the fiscal fourth quarter, compensation and benefits expenses are expected to decline.
However, the company’s cost-control efforts have been successful in trimming expenses so far this year. We expect these efforts to support bottom-line growth 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.
Lazard Ltd. (LAZ - Free Report) has an Earnings ESP of +1.39% and a Zacks Rank of 2. It is scheduled to report third-quarter results on Oct 26.
The Earnings ESP for Legg Mason, Inc. is +0.97% and it carries a Zacks Rank of 3. The company is slated to release third-quarter results on Oct 25.
T.Rowe Price Group, Inc. (TROW - Free Report) has an Earnings ESP of +3.25% and a Zacks Rank #1 (Strong Buy). It is set to report on Oct 26.You can seethe complete list of today’s Zacks #1 Rank stocks here.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>