On Dec 17, 2013, we reaffirmed our long-term recommendation on
Franklin Resources Inc.
) at Neutral. Though the company's fiscal fourth-quarter 2013
earnings lagged the Zacks Consensus Estimate, we expect it to
benefit from its consistently increasing assets under management,
strategic acquisitions and strong balance sheet.
Why This Stance?
Franklin's fiscal fourth-quarter 2013 (ended Sep 30)earnings of
80 cents per share lagged the Zacks Consensus Estimate of 86
cents. However, this compared favorably with the year-ago
earnings of 77 cents. Results were affected by
Franklin enjoys a competitive edge over its peers owing to its
diverse and innovative portfolio of investment products as well
as strong footprint in Asia and Latin America. Moreover, since
its inception in 1981, the company has been consistently
increasing its dividend from time to time, which reflects its
long-term strategy to enhance shareholder value.
However, Franklin's asset management business and margins growth
are expected to have a negative impact owing to the volatile
markets and macroeconomic headwinds. Additionally,
company's increased costs will pose limit bottom-line growth.
Over the last 60 days, the Zacks Consensus Estimate for 2013
advanced 2.2% to 92 cents per share, while for 2014 it remained
almost stable at $3.73 per share. As a result, Franklin
currently carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked investment management firms worth considering
Artisan Partners Asset Management Inc.
Kohlberg Kravis Roberts & Co. L.P.
Virtus Investment Partners, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
ARTISAN PTNR AM (APAM): Free Stock Analysis
FRANKLIN RESOUR (BEN): Free Stock Analysis
KKR & CO LP (KKR): Free Stock Analysis
VIRTUS INVESTMT (VRTS): Free Stock Analysis
To read this article on Zacks.com click here.