Franklin Resources Inc. BEN is scheduled to report first-quarter fiscal 2025 results (ended Dec. 31) on Jan. 31, before market open. While BEN’s quarterly earnings are anticipated to have declined from the year-ago reported level, revenues are expected to have risen.
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In the last reported quarter, Franklin’s earnings missed the Zacks Consensus Estimate due to a rise in its operating expenses. However, an increase in assets under management (AUM) balances, along with rising revenues, offered support.
Franklin’s earnings beat the consensus estimate in two of the trailing four quarters and missed twice, the average earnings surprise being 3.97%.
Franklin Resources, Inc. Price and EPS Surprise
Franklin Resources, Inc. price-eps-surprise | Franklin Resources, Inc. Quote
Franklin’s Q1 Earnings and Sales Estimates
The Zacks Consensus Estimate for BEN’s earnings of 54 cents has remained unchanged over the past seven days. The figure indicates a decline of 16.92% from the year-ago quarter.
The consensus estimate for sales is pegged at $2.13 billion, suggesting a year-over-year rise of 6.87%.
Key Factors & Estimates for BEN in Q1
The S&P 500 Index gained 2.4% in the October-December quarter, signaling moderate market performance. The fixed-income market saw positive flow trends, with solid returns across funds. However, equity markets lagged fixed-income performance. As a result, asset managers’ performance for the December-end quarter is likely to have benefited from strong fixed-income returns. However, weaker equity markets might have partially offset these gains.
Per the monthly metrics data published by Franklin, its preliminary total AUM as of Dec. 31, 2024, was $1.58 trillion compared to $1.68 trillion reported as of Nov. 30, 2024. The December-end AUM reflected the negative impacts of markets and long-term net outflows. The Zacks Consensus Estimate for fiscal first-quarter AUM is pegged at $1.65 trillion, indicating growth of 13.3% from the prior-year quarter’s actual. Our estimate for the metric is pegged at $1.67 trillion.
Driven by high volatility in equity markets, client activity remained strong during the quarter under review. Thus, asset managers’ top lines are expected to have been positively impacted, driven by higher performance fees and investment advisory fees, which constitute most of their revenues.
The Zacks Consensus Estimate for investment management fee for the first quarter is pegged at $1.66 billion, indicating a marginal year-over-year increase. Our estimate for the same is pegged at $1.7 billion.
The consensus estimate for sales and distribution fees of $362.8 million in the first quarter indicates a 22.4% surge from the prior-year quarter’s reported figure. We estimate the metric to be $348 million.
The consensus estimate for shareholder servicing fees of $61 million in the first quarter suggests an 87.7% surge from the prior-year quarter’s actual. The Zacks Consensus Estimate for other revenues is pegged at $11.6 million for the first quarter, calling for a year-over-year increase of 16.3%. Our estimate for shareholder servicing fees and other revenues is pegged at $57.4 million and $11.5 million, respectively.
On the cost front, the company’s initiatives to leverage ongoing technological advancements are likely to have led to cost upsurges. Talent acquisitions are likely to have kept the expense level high.
What Our Model Predicts for BEN
Per our proven model, the chances of BEN beating estimates this time are low. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you can see below.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: Franklin has an Earnings ESP of -1.99%.
Zacks Rank: BEN currently has a Zacks Rank of 3.
BEN Peers Worth a Look
Here are a couple of asset managers that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time:
AllianceBernstein Holding L.P. AB is slated to release fourth-quarter 2024 earnings on Feb. 6. The company has a Zacks Rank #3 and an Earnings ESP of +4.75% at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
AB’s quarterly earnings estimates have remained unchanged at 81 cents per share over the past week.
Ameriprise Financial, Inc. AMP is scheduled to release fourth-quarter earnings on Jan. 29. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.73%.
AMP’s quarterly earnings estimates have moved downward to $8.94 over the past week.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
