The average target price of BEN is 22 and suggests 13% downside potential. Usually, this means a SELL recommendation among investment firms, or a recommendation to decrease one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 28.0. This translates into 13% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 14.0. This is equivalent to 44% downside potential in the worst case. 

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.

Franklin Resources, Inc.

Financial Services

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. The company distributes nearly all its profit as dividends (payout ratio above 90%, a negative factor). It will not be easy to sustain such an extreme payout ratio. It may also indicate a company's lack of profitable growth opportunities, which suggests doubtful prospects. On average, the company pays dividends quarterly, which may appeal to investors valuing a regular income stream. 

BEN reported revenue of USD 8 673mn in the last 12 months, down 0% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 9% from FY24 to USD 0.74.

The stock has been growing steadily in the past six months, adding 20% in total. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 19ppts in total. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 14.5% in the last 12 months, a decline from 23.8% in FY23. 

Historically, BEN has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 4.7%, down from 14.1% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 1.4%, below the peers. The consensus estimate for FY24 for RoCE is 4.8%, again behind the peers. 

Another important profitability metric, return on assets (RoA), amounted to 1.3% in the last 12 months, a decrease from 3.7% in FY23. The market analysts predict that RoA will be 3.5% in FY24, again weaker than its peers. 

Franklin Resources, Inc. reported a return on equity (RoE) of 3.3% in the last 12 months, down from 9.3% in FY23. The market consensus projects an RoE of 9.3% in FY24, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.8 in the past several years. This ratio implies a poor shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

BEN boasts very high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually very stable and remains extremely favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability, adequate interest coverage, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to slow historical revenue growth, negligible return on capital.

In highly turbulent market conditions, BEN is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, BEN is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from low to minimal. 

Considering past and projected metrics, the stock is moderately 'expensive' compared to its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITDA, trading at neutral levels on P/FCF. 

Franklin Resources, Inc.

$ 24.34

5

Franklin Resources, Inc.

$ 24.34

5

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 24.34

About

About

Franklin Resources, Inc.

$ 24.34

5

Franklin Resources, Inc.

$ 24.34

5

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 24.34

About

About

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