Stock Analysis

Franklin Resources, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

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NYSE:BEN
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Franklin Resources, Inc. (NYSE:BEN) just released its latest quarterly results and things are looking bullish. Franklin Resources beat earnings, with revenues hitting US$2.1b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 11%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Franklin Resources

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NYSE:BEN Earnings and Revenue Growth May 6th 2021

Taking into account the latest results, the current consensus from Franklin Resources' seven analysts is for revenues of US$8.26b in 2021, which would reflect a notable 19% increase on its sales over the past 12 months. Per-share earnings are expected to soar 40% to US$3.02. Before this earnings report, the analysts had been forecasting revenues of US$7.99b and earnings per share (EPS) of US$2.75 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

It will come as no surprise to learn that the analysts have increased their price target for Franklin Resources 5.2% to US$31.00on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Franklin Resources, with the most bullish analyst valuing it at US$36.00 and the most bearish at US$24.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Franklin Resources' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 42% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 3.4% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 2.5% annually. Not only are Franklin Resources' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Franklin Resources following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Franklin Resources analysts - going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Franklin Resources (including 1 which is potentially serious) .

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What are the risks and opportunities for Franklin Resources?

Franklin Resources, Inc. is a publicly owned asset management holding company.

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Rewards

  • Price-To-Earnings ratio (17.6x) is below the Capital Markets industry average (27.9x)

  • Earnings are forecast to grow 4.88% per year

Risks

  • Profit margins (12%) are lower than last year (21.5%)

  • Large one-off items impacting financial results

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