On March 14, 2014, we issued an updated research report on
California based global investment management firm
Franklin Resources Inc.
). The company started fiscal 2014 with a positive note as it
recently reported impressive first-quarter 2014 results. Results
were aided by top-line growth and improved assets under
management (AUM), partially offset by higher operating expenses.
On Jan 30, Franklin came out with fiscal first-quarter (ended Dec
2013) 2014 earnings of 96 cents per share, outpacing the Zacks
Consensus Estimate by 3.2%. Total operating revenue increased 11%
year over year to $2.11 billion due to growth in most revenue
Franklin has consistently exhibited efforts in enhancing its
organic growth strategy driven by its portfolio of diverse and
innovative investment products along with a relatively strong
distribution platform. Further, driven by market appreciation and
net new inflows, Franklin's AUM has been consistently growing and
recorded a 5-year CAGR of 10.05% in fiscal 2013.
Franklin's efforts in enhancing shareholder value through its
efficient capital deployment activities are commendable. Notably,
during fiscal first-quarter 2014 the company enhanced shareholder
value by returning over $201.2 million to the shareholders
through dividends and share repurchases.
Though the company exhibits strong fundamentals, we remain
cautious due to the current economic uncertainty across the
industry. These include mounting expenses, concentration risk
stemming from investment management fees that constitutes a major
source of revenue and the prevailing stringent regulatory
Further, the Zacks Consensus Estimate over the past 60 days
declined more than 1% to $3.79 per share for fiscal 2014. Also,
for fiscal 2015, it declined nearly 1% to $4.19 per share.
Franklin currently carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look in the Sector
Fortress Investment Group LLC
Och-Ziff Capital Management Group LLC
) are better-ranked stocks in this space. All these hold a Zacks
Rank #1 (Strong Buy).
FRANKLIN RESOUR (BEN): Free Stock Analysis
FORTRESS INVEST (FIG): Free Stock Analysis
LAZARD LTD (LAZ): Free Stock Analysis Report
OCH-ZIFF CAPTL (OZM): Free Stock Analysis
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