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1. Company Snapshot

1.a. Company Description

Franklin Resources, Inc.is a publicly owned asset management holding company.Through its subsidiaries, the firm provides its services to individuals, institutions, pension plans, trusts, and partnerships.


It launches equity, fixed income, balanced, and multi-asset mutual funds through its subsidiaries.The firm invests in the public equity, fixed income, and alternative markets.Franklin Resources, Inc.


was founded in 1947 and is based in San Mateo, California with an additional office in Hyderabad, India.

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1.b. Last Insights on BEN

Franklin Resources, Inc.'s recent performance was driven by strong AUM growth, acquisitions, and solid capital returns. The company's quarterly dividend of $0.32 per share represents a 3.2% increase over the same quarter last year. Additionally, Franklin Resources' recent earnings release showed a beat in Q3 earnings, with AUM rising sequentially. The company's growth opportunities in alternatives and international markets are also noteworthy. A $3.5 million line of credit agreement was also secured by its subsidiary.

1.c. Company Highlights

2. Franklin Resources Posts Strong Q1 Earnings, Driven by Record Long-term Inflows

Franklin Resources reported adjusted operating income of $437.3 million for its first fiscal quarter, with earnings per share (EPS) of $0.7, beating analyst estimates of $0.55. The company's revenue growth was driven by record long-term inflows of $118.6 billion, a 40% increase from the prior quarter and 22% from the prior year quarter. Assets under management (AUM) ended the quarter at $1.68 trillion, up due to long-term net inflows and the acquisition of Apira. The company's financial performance was strong, with a disciplined approach to expense management.

Publication Date: Feb -08

📋 Highlights
  • Record Long-Term Inflows:: $118.6 billion in long-term inflows, up 40% QoQ and 22% YoY.
  • Assets Under Management (AUM):: $1.68 trillion AUM, driven by $28 billion in long-term net inflows and Apira acquisition.
  • Alternative AUM Growth:: $274 billion in alternatives, with $10.8 billion raised (including $9.5 billion in private markets) and $20.4 billion in unfunded mandates.
  • Adjusted Operating Income:: $437.3 million, with $200 million in cost savings target and disciplined expense management.
  • ETF Platform Expansion:: $58 billion in ETF AUM and $7.5 billion in net flows, exceeding industry growth rates.

Business Highlights

The company's diversified platform and continued innovation positioned it to capture opportunities across market cycles. Alternative AUM is $274 billion, with $10.8 billion raised during the quarter, including $9.5 billion in private market assets. The institutional pipeline of won but unfunded mandates remains strong at $20.4 billion. Franklin Templeton's ETF platform continues to grow at a faster rate than the industry, reaching a new high with $58 billion in AUM and generating $7.5 billion in net flows.

Growth Prospects

The company expects EFR to be stable in the next quarter and sees potential upside in the following two quarters due to fundraising around alternative assets. For the long term, the company targets an operating margin of over 30% by the end of its five-year plan. The company is focused on strategic M&A, with a goal to double the size of its fiduciary business in its five-year plan. Over 60% of operating income has been added through M&A in recent years, and the company has a track record of successful integrations.

Valuation

Using the Price-to-Book Ratio (P/B) of 1.16 and the Dividend Yield of 4.74%, we can assess the company's valuation. The P/B ratio is slightly above 1, indicating that the company's market value is relatively in line with its book value. The dividend yield is attractive, suggesting that the stock may be a good option for income-seeking investors. Analysts estimate next year's revenue growth at 6.1%, which is a reasonable expectation given the company's strong track record of growth.

Expense Management

The company remains disciplined in managing expenses while continuing to invest strategically in areas of growth and innovation. The company guides for $860 million in comp and benefits, $155 million in IS and T, and $190-195 million in G&A. Around 35-40% of expenses are variable, providing flexibility in case of market downturns.

3. NewsRoom

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Financial Survey: Cannae (NYSE:CNNE) & Franklin Resources (NYSE:BEN)

Feb -09

Source: defenseworld.net

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Franklin Resources AGM: Shareholders OK Bigger Equity Plans; Management Touts $1.66T AUM

Feb -07

Source: defenseworld.net

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BEN's January AUM Rises 1.3% Sequentially: What's Driving Growth?

Feb -06

Source: zacks.com

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Franklin Resources, Inc. Announces Preliminary Month-End Assets Under Management

Feb -04

Source: businesswire.com

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Franklin Resources, Inc. Announces Quarterly Dividend

Feb -03

Source: businesswire.com

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Franklin Resources: Don't Mistake A Bull Market For An Improved Business

Feb -02

Source: seekingalpha.com

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3 “Left for Dead” Dividend ETFs That Will Make a Big Comeback in 2026

Feb -01

Source: 247wallst.com

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Franklin Resources Q1 Earnings Call Highlights

Feb -01

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.86%)

6. Segments

Investment Management Fees

Expected Growth: 2.8%

Franklin Resources, Inc.'s 2.8% growth in Investment Management Fees is driven by increasing assets under management (AUM) from strong market performance and net inflows, as well as expansion into new markets and products, such as sustainable and ESG-focused offerings, and strategic acquisitions.

Sales and Distribution Fees

Expected Growth: 3.2%

Franklin Resources, Inc.'s 3.2% growth in Sales and Distribution Fees is driven by increasing assets under management, expansion into new markets, and a shift towards higher-fee products. Additionally, the company's strategic acquisitions and partnerships have enhanced its distribution capabilities, leading to higher fees. Furthermore, the trend towards passive investing and demand for sustainable investment products have also contributed to the growth.

Shareholder Servicing Fees

Expected Growth: 2.9%

Franklin Resources' 2.9% growth in Shareholder Servicing Fees is driven by increasing assets under management, expansion of distribution channels, and a rise in demand for investment products. Additionally, the company's strategic acquisitions and partnerships have enhanced its servicing capabilities, leading to higher fees. Furthermore, the trend towards passive investing and the need for cost-effective solutions have also contributed to the growth.

Other

Expected Growth: 3.1%

Franklin Resources' 3.1% growth in 'Other' segment is driven by increasing demand for alternative investment products, expansion of its wealth management business, and strategic acquisitions. Additionally, the company's focus on emerging markets and growing presence in Asia have contributed to its growth.

7. Detailed Products

Franklin Templeton Mutual Funds

A range of mutual funds that cater to different investment objectives and risk profiles

Franklin Templeton Exchange-Traded Funds (ETFs)

A suite of ETFs that track various market indices and sectors

Franklin Templeton Alternative Investments

A range of alternative investment strategies, including private equity, real assets, and hedge funds

Franklin Templeton Institutional Investments

Customized investment solutions for institutional clients, including pension funds, endowments, and foundations

Franklin Templeton Retirement Services

A range of retirement plan solutions for employers and employees

Franklin Templeton Wealth Management

Comprehensive wealth management services for high-net-worth individuals and families

8. Franklin Resources, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Franklin Resources, Inc. operates in the financial services industry, which has a moderate threat of substitutes. While there are alternative investment options available, the company's diversified product offerings and strong brand reputation help mitigate this threat.

Bargaining Power Of Customers

Franklin Resources, Inc. has a large and diversified customer base, which reduces the bargaining power of individual customers. Additionally, the company's products and services are often tailored to meet specific customer needs, making it difficult for customers to switch to alternative providers.

Bargaining Power Of Suppliers

Franklin Resources, Inc. has a diverse supplier base, and the company is not heavily reliant on any single supplier. This reduces the bargaining power of suppliers and allows the company to negotiate favorable terms.

Threat Of New Entrants

The financial services industry has significant barriers to entry, including regulatory hurdles and the need for significant capital investments. This makes it difficult for new entrants to compete with established players like Franklin Resources, Inc.

Intensity Of Rivalry

The financial services industry is highly competitive, with many established players competing for market share. Franklin Resources, Inc. must continually innovate and improve its products and services to remain competitive in this environment.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 50.63%
Debt Cost 3.95%
Equity Weight 49.37%
Equity Cost 11.22%
WACC 7.53%
Leverage 102.55%

11. Quality Control: Franklin Resources, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Invesco

A-Score: 6.4/10

Value: 7.6

Growth: 2.9

Quality: 6.7

Yield: 7.0

Momentum: 8.5

Volatility: 6.0

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SEI Investments

A-Score: 6.0/10

Value: 3.9

Growth: 5.7

Quality: 9.2

Yield: 2.0

Momentum: 5.5

Volatility: 9.7

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Affiliated Managers Group

A-Score: 5.7/10

Value: 4.2

Growth: 5.4

Quality: 7.7

Yield: 0.0

Momentum: 9.0

Volatility: 8.0

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Franklin Resources

A-Score: 5.6/10

Value: 5.0

Growth: 2.8

Quality: 4.3

Yield: 8.0

Momentum: 5.5

Volatility: 8.0

1-Year Total Return ->

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TPG

A-Score: 4.1/10

Value: 1.1

Growth: 1.6

Quality: 6.0

Yield: 7.0

Momentum: 3.5

Volatility: 5.7

1-Year Total Return ->

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StepStone Group

A-Score: 4.1/10

Value: 4.2

Growth: 1.9

Quality: 2.5

Yield: 5.0

Momentum: 5.5

Volatility: 5.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

28.16$

Current Price

28.16$

Potential

-0.00%

Expected Cash-Flows