Franklin (BEN) Reflects Cost-Control Benefits: Time to Buy?

On Dec 29, we issued an updated research report on Franklin Resources BEN. The company has been benefiting from expense management and strong diversification strategies. However, lower investment management fees, net outflows and strict regulatory environment remain near-term concerns.

The company’s earnings estimates for fiscal 2021 and 2022 have inched up 2.6% and 2.1%, respectively, in the last 30 days. As a result, the stock currently carries a Zacks Rank #2 (Buy).

Franklin’s shares have gained 22.8% over the past six months compared with the industry’s rally of 25.5%.

The company exhibits impressive cost-control measures. Though it recorded a rise in operating expenses of 2% and 7% in fiscal 2018 and 2020, respectively, on account of potential investments in technology, expenses remained stable in fiscal 2019. Further, it witnessed declines of 7%, 14% and 3% in operating expenses in fiscal 2015, 2016 and 2017, respectively.

Also, Franklin remains well poised to undertake inorganic growth strategies. In the last couple of years, the company has completed acquisitions that helped it improve and expand alternative investments and multi-asset solutions platforms. This, in turn, is likely to aid it in providing world-class investment solutions to clients. Notably, Franklin recently concluded an all-cash acquisition of Legg Mason, which is expected to be accretive to earnings in fiscal 2021.

Franklin remains committed on enhancing shareholders’ value. Notably, in April 2018, the company announced an additional repurchase authorization of up to 80 million shares. Moreover, driven by a healthy liquidity position, the company has hiked its dividend every year since its inception in 1981 — the latest being the 4% increase this December. The company also paid a special cash dividend of $3 per share in April 2018.

Other Stocks to Consider

Invesco Ltd. IVZ has witnessed upward earnings estimate revisions for 2021 over the past 60 days. Moreover, this Zacks #1 Ranked (Strong Buy) stock has gained 65.8% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.

Federated Hermes, Inc. FHI next-year earnings estimate moved north in 60 days’ time. Further, the company’s shares have surged 22.4% over the past six months. At present, it flaunts a Zacks Rank of 1.

BlackRock, Inc. BLK has witnessed recorded upward earnings estimate revision for the next year in the past 60 days. This Zacks #2 Ranked stock has appreciated 29.7% over the past six months.

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