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Valued at a market cap of $13.2 billion, Franklin Resources, Inc. (BEN) is a publicly owned asset management holding company that provides its services to individuals, institutions, pension plans, trusts, and partnerships. The San Mateo, California-based company offers a range of mutual funds, including equity, fixed income, balanced, and multi-asset strategies. It invests across public equity, fixed income, and alternative markets.
This asset management company has underperformed the broader market over the past 52 weeks. Shares of BEN have gained 14.9% over this time frame, while the broader S&P 500 Index ($SPX) has surged 18.4%. Nonetheless, on a YTD basis, the stock is up 23.9%, outpacing SPX’s 7.6% return.
Narrowing the focus, BEN has also lagged behind the Financial Select Sector SPDR Fund’s (XLF) 23.4% uptick over the past 52 weeks. However, it has outperformed the ETF’s 7.4% rise on a YTD basis.
Despite delivering a stronger-than-expected Q3 performance on Aug. 1, shares of BEN dipped marginally after the earnings release. Primarily due to lower investment management fees, the company’s operating revenue dropped 2.8% year-over-year to $2.1 billion. However, the top-line figure exceeded the consensus estimates by 3%. Meanwhile, its adjusted EPS also decreased by 18.3% from the year-ago quarter to $0.49, but surpassed the analyst expectations of $0.48. A 200-basis-point year-over-year fall in its adjusted operating margin impacted its profitability. These declines, despite the headline beats, may have contributed to the slight dip in investor confidence.
For the current fiscal year, ending in September, analysts expect BEN’s EPS to decline 13% year over year to $2.08. The company’s earnings surprise history is mixed. It met or topped the consensus estimates in three of the last four quarters, while missing on another occasion.
Among the 12 analysts covering the stock, the consensus rating is a "Hold" which is based on two “Strong Buy,” five "Hold,” one “Moderate Sell,” and four “Strong Sell” ratings.
This configuration is slightly more bullish than two months ago, with one analyst suggesting a “Strong Buy” rating.
On Aug. 4, JPMorgan Chase & Co. (JPM) analyst Ken Worthington maintained a "Hold" rating on BEN and set a price target of $29, implying a 15.4% potential upside from the current levels.
While the company is trading above its mean price target of $24.08, its Street-high price target of $31 suggests an upside potential of 23.4%.
