On Dec 16, 2014, we issued an updated research report on Franklin Resources Inc. (BEN). The California-based global investment management firm has exhibited efforts in maintaining its assets under management (AUM) growth momentum.
For the fiscal year 2014 (ended Sep 30), AUM grew 6.3% year over year. Also, for October and November 2014, it grew 3.4% and 3.3%, respectively, year over year. Notably, Franklin’s AUM recorded a five-year (fiscal 2010-fiscal 2014) CAGR of 8.6%, driven by market appreciation. Given the impressive performance record, we expect the uptrend to follow in the upcoming quarters as markets are improving, though at a sluggish pace.
Further, Franklin’s steady capital deployment activities continue to boost investors’ confidence. During fiscal year 2014, the company enhanced shareholder value by returning around $912.6 million to the shareholders through dividends and share repurchases. Recently, the company hiked its dividend by 25% and announced a special cash dividend of 50 cents per share to be paid with the regular dividend in Jan 2015.
We believe Franklin’s diverse and innovative investment products, strong distribution platform and its strategic global footprint would aid organic growth. Nevertheless, among several issues, escalating costs remain a major concern for the company. Operating expenses recorded a three-year (fiscal 2012-fiscal 2014) CAGR of 7.2%.
Over the past 30 days, the Zacks Consensus Estimate increased by a penny to $3.83 per share for 2014, while it remained stable at $4.20 per share for 2015. Hence, Franklin currently carries a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Some better-ranked investment managers include KKR & Co. L.P. (KKR) and Monroe Capital Corp. (MRCC) with a Zacks Rank #1 (Strong Buy), while Ameriprise Financial, Inc. (AMP) carries a Zacks Rank #2 (Buy).
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
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment