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Franklin Q4 Earnings Beat Estimates on Higher Revenues, AUM Rises Y/Y
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Key Takeaways
Franklin's Q4'26 adjusted EPS of 94 cents beat the 78-cent estimate and rose from 67 cents a year ago.
BEN's revenues rose 3.9% Y/Y, while operating expenses fell 7.9%, lifting operating margins.
BEN's AUM grew 8.1% Y/Y to $1.80 trillion, with $20.8 billion in long-term net inflows during the quarter.
Franklin Templeton, Inc. (BEN - Free Report) reported fourth-quarter fiscal 2026 (ended Sept. 30, 2026) adjusted earnings of 94 cents per share, which surpassed the Zacks Consensus Estimate of 78 cents per share. The bottom line also improved from 67 cents reported in the year-ago quarter.
Results benefited from higher operating revenues, increased assets under management (AUM) and strong long-term net inflows. Lower operating expenses also supported the results.
Results include certain items. After considering those, net income (GAAP basis) was $380.1 million, significantly higher than $117.6 million reported in the prior-year quarter.
For fiscal 2026, adjusted earnings per share (EPS) were $3.07 compared with $2.22 in the prior year.
Total operating revenues increased 3.9% year over year to $2.43 billion in the fiscal fourth quarter. Further, the reported figure outpaced the Zacks Consensus Estimate of $2.36 billion.
The increase was primarily driven by higher investment management fees and sales and distribution fees. Investment management fees rose 4.1% year over year to $1.95 billion. Sales and distribution fees increased 5.6% to $403.9 million from the prior-year quarter. However, shareholder servicing fees declined 5.1% to $75.2 million, while other revenues fell 26.4% to $10.3 million from the year-ago quarter.
For fiscal 2026, total operating revenues increased 7.3% year over year to $9.42 billion from $8.77 billion.
Total operating expenses decreased 7.9% year over year to $2.08 billion, primarily due to lower amortization of intangible assets and the absence of impairment charges, partially offset by higher compensation and benefits, sales, distribution and marketing expenses, information systems and technology costs, and general and administrative expenses.
Franklin reported an operating margin of 14.6% compared with 3.6% in the year-ago quarter.
Franklin’s AUM Improves
As of Sept. 30, 2026, total AUM was $1.80 trillion, increasing 8.1% from the prior-year quarter.
The company generated $20.8 billion of long-term net inflows during the quarter compared with long-term net outflows of $11.9 billion in the year-ago period.
The average AUM increased 10.3% year over year to $1.80 trillion.
Franklin’s Capital Position
As of Sept. 30, 2026, cash and cash equivalents and investments totaled $6.0 billion, while total stockholders’ equity was $13.2 billion. Including direct investments in consolidated investment products, total cash and investments were $7.4 billion.
Franklin’s Capital Distribution
During the quarter, Franklin Templeton repurchased 2.5 million shares of common stock for $86.1 million. Overall, the company returned $259.7 million to shareholders during the quarter through share repurchases and dividends.
Franklin's Fiscal 2027 Outlook
For fiscal 2027, management anticipates an adjusted operating margin of approximately 30%, achieving its original fiscal 2029 strategic target two years ahead of schedule. Given the faster-than-expected progress, Franklin has raised its fiscal 2029 adjusted operating margin target to 35%. The adjusted effective fee rate is expected to remain broadly in line with fiscal 2026.
Based on Oct. 31, 2026, AUM levels and assuming flat markets, adjusted operating expenses, excluding performance fee-related costs, are projected to remain in line with or slightly above fiscal 2026 levels.
The outlook incorporates the Stoneshield and Encina acquisitions, with anticipated cost savings expected to offset additional spending on strategic initiatives.
Our View on Franklin
Franklin delivered a solid quarter, with higher operating revenues, AUM growth and robust long-term net inflows underscoring continued business momentum. Lower expenses and improved operating margins further strengthened performance, while dividends and share repurchases highlighted its commitment to shareholder returns.
Beyond its quarterly performance, Franklin is expanding its investment capabilities and presence in high-growth alternative asset classes. The planned acquisition of Stoneshield Capital will add $9 billion in AUM and expand Clarion Partners' European real estate platform, further strengthening BEN's alternatives franchise.
Additionally, the completed Encina Lender Finance transaction, involving approximately $480 million in initial commitments and the addition of an experienced team to Benefit Street Partners, will bolster its asset-backed finance capabilities. Together, these initiatives are expected to broaden Franklin's investment offerings, create new fee-earning AUM opportunities and support long-term growth. However, pressure on shareholder servicing fees and other revenues remains a near-term concern.
Franklin Templeton Inc Price, Consensus and EPS Surprise
T. Rowe Price Group, Inc. (TROW - Free Report) reported third-quarter 2026 adjusted earnings per share of $2.86, which surpassed the Zacks Consensus Estimate of $2.58. Further, the bottom line increased 1.8% year over year.
TROW’s results benefited from higher investment advisory fees, increased average assets under management and strong capital allocation-based income. However, substantial net client outflows and higher adjusted operating expenses were headwinds.
Ares Management Corporation’s (ARES - Free Report) third-quarter 2026 after-tax realized income per share of $1.26 surpassed the Zacks Consensus Estimate by 0.8%. The bottom line increased from $1.19 in the prior-year quarter.
ARES’ results reflected growth from higher management fees and fee-related earnings. A higher assets under management balance was another positive. However, the upside was partly offset by lower incentive fees.
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Franklin Q4 Earnings Beat Estimates on Higher Revenues, AUM Rises Y/Y
Key Takeaways
Franklin Templeton, Inc. (BEN - Free Report) reported fourth-quarter fiscal 2026 (ended Sept. 30, 2026) adjusted earnings of 94 cents per share, which surpassed the Zacks Consensus Estimate of 78 cents per share. The bottom line also improved from 67 cents reported in the year-ago quarter.
Results benefited from higher operating revenues, increased assets under management (AUM) and strong long-term net inflows. Lower operating expenses also supported the results.
Results include certain items. After considering those, net income (GAAP basis) was $380.1 million, significantly higher than $117.6 million reported in the prior-year quarter.
For fiscal 2026, adjusted earnings per share (EPS) were $3.07 compared with $2.22 in the prior year.
Franklin’s Revenues Increase & Expenses Decline Y/Y
Total operating revenues increased 3.9% year over year to $2.43 billion in the fiscal fourth quarter. Further, the reported figure outpaced the Zacks Consensus Estimate of $2.36 billion.
The increase was primarily driven by higher investment management fees and sales and distribution fees. Investment management fees rose 4.1% year over year to $1.95 billion. Sales and distribution fees increased 5.6% to $403.9 million from the prior-year quarter. However, shareholder servicing fees declined 5.1% to $75.2 million, while other revenues fell 26.4% to $10.3 million from the year-ago quarter.
For fiscal 2026, total operating revenues increased 7.3% year over year to $9.42 billion from $8.77 billion.
Total operating expenses decreased 7.9% year over year to $2.08 billion, primarily due to lower amortization of intangible assets and the absence of impairment charges, partially offset by higher compensation and benefits, sales, distribution and marketing expenses, information systems and technology costs, and general and administrative expenses.
Franklin reported an operating margin of 14.6% compared with 3.6% in the year-ago quarter.
Franklin’s AUM Improves
As of Sept. 30, 2026, total AUM was $1.80 trillion, increasing 8.1% from the prior-year quarter.
The company generated $20.8 billion of long-term net inflows during the quarter compared with long-term net outflows of $11.9 billion in the year-ago period.
The average AUM increased 10.3% year over year to $1.80 trillion.
Franklin’s Capital Position
As of Sept. 30, 2026, cash and cash equivalents and investments totaled $6.0 billion, while total stockholders’ equity was $13.2 billion. Including direct investments in consolidated investment products, total cash and investments were $7.4 billion.
Franklin’s Capital Distribution
During the quarter, Franklin Templeton repurchased 2.5 million shares of common stock for $86.1 million. Overall, the company returned $259.7 million to shareholders during the quarter through share repurchases and dividends.
Franklin's Fiscal 2027 Outlook
For fiscal 2027, management anticipates an adjusted operating margin of approximately 30%, achieving its original fiscal 2029 strategic target two years ahead of schedule. Given the faster-than-expected progress, Franklin has raised its fiscal 2029 adjusted operating margin target to 35%. The adjusted effective fee rate is expected to remain broadly in line with fiscal 2026.
Based on Oct. 31, 2026, AUM levels and assuming flat markets, adjusted operating expenses, excluding performance fee-related costs, are projected to remain in line with or slightly above fiscal 2026 levels.
The outlook incorporates the Stoneshield and Encina acquisitions, with anticipated cost savings expected to offset additional spending on strategic initiatives.
Our View on Franklin
Franklin delivered a solid quarter, with higher operating revenues, AUM growth and robust long-term net inflows underscoring continued business momentum. Lower expenses and improved operating margins further strengthened performance, while dividends and share repurchases highlighted its commitment to shareholder returns.
Beyond its quarterly performance, Franklin is expanding its investment capabilities and presence in high-growth alternative asset classes. The planned acquisition of Stoneshield Capital will add $9 billion in AUM and expand Clarion Partners' European real estate platform, further strengthening BEN's alternatives franchise.
Additionally, the completed Encina Lender Finance transaction, involving approximately $480 million in initial commitments and the addition of an experienced team to Benefit Street Partners, will bolster its asset-backed finance capabilities. Together, these initiatives are expected to broaden Franklin's investment offerings, create new fee-earning AUM opportunities and support long-term growth. However, pressure on shareholder servicing fees and other revenues remains a near-term concern.
Franklin Templeton Inc Price, Consensus and EPS Surprise
Franklin Templeton Inc price-consensus-eps-surprise-chart | Franklin Templeton 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 Franklin’s Peers
T. Rowe Price Group, Inc. (TROW - Free Report) reported third-quarter 2026 adjusted earnings per share of $2.86, which surpassed the Zacks Consensus Estimate of $2.58. Further, the bottom line increased 1.8% year over year.
TROW’s results benefited from higher investment advisory fees, increased average assets under management and strong capital allocation-based income. However, substantial net client outflows and higher adjusted operating expenses were headwinds.
Ares Management Corporation’s (ARES - Free Report) third-quarter 2026 after-tax realized income per share of $1.26 surpassed the Zacks Consensus Estimate by 0.8%. The bottom line increased from $1.19 in the prior-year quarter.
ARES’ results reflected growth from higher management fees and fee-related earnings. A higher assets under management balance was another positive. However, the upside was partly offset by lower incentive fees.