The Bull Case for Franklin Resources (BEN) Could Change Following Q3 Earnings Miss and European Credit Push

• Franklin Resources, Inc. recently reported a decline in third-quarter net income and earnings per share, with revenue also lower compared to the prior year.
• Amid operational challenges, the company advanced efforts in alternative asset fundraising and fintech innovation, highlighted by an agreement to acquire a majority interest in Apera Asset Management to boost its European private credit capabilities.
• We'll examine how the earnings miss and evolving business mix may shape Franklin Resources' future growth outlook and valuation.

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Franklin Resources Investment Narrative Recap

To own shares of Franklin Resources, investors need to believe in the company’s ability to rebound from recent earnings pressure and capitalize on growth opportunities in alternatives and fintech. The third-quarter earnings miss and corresponding share price reaction reinforce that the primary short-term catalyst remains the funding of its institutional mandate pipeline, while the main risk is further long-term outflows from Western Asset. At this point, the recent earnings update is material for sentiment but does not alter these key drivers.

Among the new developments, the company’s ongoing share buyback program stands out. Franklin Resources completed the repurchase of 7.3 million shares for US$157.41 million in Q3, continuing a long-term capital return strategy that could cushion downside volatility as the company works to stabilize its business mix and reaccelerate asset growth. In contrast, investors should be aware of the potential for additional profit margin erosion if...

Read the full narrative on Franklin Resources (it's free!)

Franklin Resources is projected to generate $8.8 billion in revenue and $1.5 billion in earnings by 2028. This outlook assumes a -0.4% annual revenue decline and a $1.1 billion increase in earnings from the current $358.3 million.

Uncover how Franklin Resources' forecasts yield a $24.70 fair value, in line with its current price.

Exploring Other Perspectives

Three Simply Wall St Community fair value estimates for Franklin Resources span US$16.22 to US$24.70. While opinions vary, long-term net outflows from key segments raise questions about future revenue and margin strength.

Explore 3 other fair value estimates on Franklin Resources - why the stock might be worth as much as $24.70!

Build Your Own Franklin Resources Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Franklin Resources research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.
• Our free Franklin Resources research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Franklin Resources' overall financial health at a glance.

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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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