Franklin Templeton (BEN): A Fresh Look at Valuation After New ETF Launch Expands Global Strategy

Franklin Resources has rolled out two new international equity ETFs, managed by Putnam Investments and Templeton Global Investments. These ETFs are designed to give investors differentiated strategies for engaging with global markets outside the US.

See our latest analysis for Franklin Resources.

The launch of these new ETFs comes as Franklin Resources builds on a year of renewed momentum. The shares sit at $22.84, reflecting a 13.4% year-to-date share price return, while the one-year total shareholder return stands at an impressive 20.3%. Although the stock cooled off in the last three months, the long-term trend remains solid with a 42% five-year total return. Ongoing product innovation and a focus on quality-driven strategies appear to be fueling renewed investor confidence.

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With shares still trading at a notable discount to analyst price targets, is the market underestimating Franklin Resources' potential? Alternatively, is future growth already reflected in the current price, leaving limited upside for new investors?

Most Popular Narrative: 10.3% Undervalued

Franklin Resources last closed at $22.84, and the most widely followed narrative assigns it a fair value north of $25. With the stock trading well below this level, the backdrop is set for a closer look at the assumptions justifying this optimistic stance.

The company is actively expanding its presence in non-U.S. and emerging markets, now with $500 billion of AUM outside the US and new mandates in countries like Uzbekistan and Saudi Arabia. This positions Franklin Resources to benefit from the rising global wealth and the increasing allocation of institutional capital worldwide, which is likely to support future AUM growth and top-line revenue expansion.

Read the complete narrative.

Want to unravel the math behind that bullish valuation? Explore the bold revenue and margin improvement assumptions, plus a profit multiple below the industry norm. Think you know what's powering the price target? Read the full breakdown and get the real story behind these projections.

Result: Fair Value of $25.45 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent net outflows at key divisions and ongoing fee pressures could present challenges for Franklin Resources in achieving sustained earnings growth and margin expansion.

Find out about the key risks to this Franklin Resources narrative.

Another View: Multiples Suggest Caution

While the fair value estimate points to an opportunity, the current price-to-earnings ratio tells a different story. Franklin Resources trades at 43.8x earnings, which is not only far above the industry average of 24x but also significantly higher than the fair ratio of 17.7x. This raises concerns about valuation risk if the market rerates toward more typical levels. Could investors be paying up for future growth that may not fully materialize?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Franklin Resources Narrative

If you see the numbers differently or want to dive in and craft your own perspective, you can build a personalized thesis in just minutes, Do it your way

A great starting point for your Franklin Resources research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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