Franklin Resources, Inc. (NYSE: $BEN) is one of the largest global investment management firms better known as Franklin Templeton. It provides financial advisory services to retirement, mutual, institutional, and separate accounts investors. Based in San Mateo, CA, it has over $1.5 trillion in assets under management.
On Monday, April 29, 2024, Franklin Resources released its second quarter fiscal 2024 results to a tepid market reaction.
Franklin Resources Q2 Results
In the second quarter, the company reported a revenue of $2.15 billion, an 8% YoY increase, and above analysts’ estimates of $1.66 billion. Adjusted net income came in at $306.6 million for an adjusted EPS of $0.56, compared to an adjusted net income of $316.7 million and adjusted EPS of $0.61 in the previous year, below estimates of a $0.58 adjusted EPS.
The adjusted operating income came in at $419.6 million compared to $440.2 million the previous year, while the adjusted operating margin came in at 25.2% compared to 27.3% in Q223.
Its net income came in at $124.2 for a diluted EPS of $0.23, marking a 51% decline in net income and a 54% decline in diluted EPS.
The operating income declined 37% to $129.3 million for an operating margin of 6% compared to the 10.4% reported the previous year.
Franklin Resources ended the second quarter with $1.645 trillion in assets under management, a 13% increase due to $148.3 billion from the Putnam investments acquisition, $6.9 billion in long-term net inflows, offset by $4.8 billion in outflows, and a $38.8 billion net market change.
It declared a dividend per share of $0.31, a 3% increase from the previous year’s $0.30.
CEO’s Comments
Jenny Johnson, CEO of Franklin Resources, stated that the performance in the second quarter was due to deepening client relationships and diversification efforts. Johnson said that they experienced positive contributions from several asset classes and regions. She highlighted the $6.9 billion in net inflows, led by inflows from multi-asset, fixed-income, and alternative assets.
Franklin Resources (BEN) Stock Performance
Following the earnings miss, BEN stock declined 4.62% to $23.83 per share as of 11:14 AM EDT on Monday, April 29. The stock is now down 18.61% year to date and 4.36% in the past 52 weeks compared to the 22.36% gain of the SPX, with an intraday market cap of $13.16 billion.
Analysts Outlook
Analysts are pessimistic about BEN stock’s future, giving it an overall moderate sell rating. They forecast a wide range for the stock, with a high of $30 and a low of $25. Their average forecast of $28.34 is a 19.05% upside based on the most recent price.
Should You Buy BEN Stock?
Following the over 50% decline in net income and the miss in earnings, investors are rightfully wary about the future of Franklin Resources (BEN) stock. However, the stock could still be an attractive option for dividend investors. It has consistently grown its adjusted EPS and pays out over half of those earnings as dividends.
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