Franklin Resources, Inc. BEN is scheduled to report second-quarter fiscal 2017 (ended Mar 31) results before the opening bell on Apr 28.
In the last quarter, earnings of this asset manager outpaced the Zacks Consensus Estimate by 9 cents and came 4% above the prior-year quarter. Results displayed a decline in expenses, partially offset by reduced revenues. The quarter witnessed net outflows and decline in assets under management (AUM).
Franklin recorded positive earnings surprises in three of the trailing four quarters, with an average beat of 11.8% as depicted in the chart below:
Franklin Resources, Inc. Price and EPS Surprise
Franklin Resources, Inc. Price and EPS Surprise | Franklin Resources, Inc. Quote
Franklin's shares gained 22.1% in the past six months, outperforming the Zacks categorized Investment Management industry's 17.3% growth.
According to our quantitative model, we cannot conclusively predict an earnings beat for Franklin in the to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #3 (Hold) or better for this to happen, but that's not the case with Franklin as elaborated below.
(You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .)
Zacks ESP: The Earnings ESP for Franklin is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 67 cents.
Zacks Rank: Franklin currently carries a Zacks Rank #3. This increases the predictive power of ESP but we need to have positive ESP to be reasonably confident of an earnings beat.
Factors to Influence FIscal Q2 Results
The equity markets remained strong in the January-March quarter. Among others, the S&P 500 Index gained 4.3% in the quarter. The uncertainties prevailing in the market relating to Trump's policies, led to a surge in the trading activities. The company's top line might benefit from this background.
Based on Franklin's AUM disclosure for Mar 2017, the upcoming release will exhibit higher assets under management. However, on the down side, the company is likely to record continued outflows mainly tied with Global Fixed Income asset class.
Franklin's cost-control efforts should support bottom-line growth to some extent. Notably, management anticipates expenses in fiscal 2017 to remain flat or decline slightly, considering the impact of previous cost-cutting initiatives.
We also expect the company's top line to get support from its diversified portfolio offerings and global presence.
The activities of Franklin during the quarter were inadequate to win analysts' confidence. As a result, the Zacks Consensus Estimate remained stable at 67cents, over the last seven days.
Stocks that Warrant a Look
Here are some stocks you may want to consider, as according to our model they have the right combination of elements to post an earnings beat this quarter.
The Earnings ESP for Moody's Corporation MCO is +4.17% and it carries a Zacks Rank #2 (Buy). The company is scheduled to release first-quarter 2017 results on May 5. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Ares Management L.P. ARES has an Earnings ESP of +2.56% and a Zacks Rank #3. It is slated to report first-quarter results on May 8.
The Earnings ESP for Manning & Napier, Inc. MN is +14.29% and it carries a Zacks Rank #3. The company is scheduled to release first-quarter results on May 3.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
Click here for a peek at this private information >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Moody's Corporation (MCO): Free Stock Analysis Report Franklin Resources, Inc. (BEN): Free Stock Analysis Report Ares Management L.P. (ARES): Free Stock Analysis Report Manning & Napier, Inc. (MN): Free Stock Analysis Report To read this article on Zacks.com click here.