Franklin Stock Rises 1.7% as Q1 Earnings Beat, AUM Rises Sequentially

Franklin Resources Inc. BEN reported first-quarter fiscal 2026 (ended Dec. 31, 2025) adjusted earnings of 70 cents per share, which surpassed the Zacks Consensus Estimate of 55 cents per share. Also, the bottom line compared favorably with 59 cents reported in the year-ago quarter.

Shares of the company gained 1.7% in the early trading session following the release of better-than-expected results. A full day’s trading session will depict a clearer picture.

BEN’s results benefited from higher revenues and an improved assets under management (AUM) balance. However, higher expenses remained a headwind.

The results include certain items. After considering those, net income (GAAP basis) was $255.5 million, up 56.2% year over year.

Franklin’s Revenues & Expenses Increase Y/Y

Total operating revenues increased 3.3% year over year to $2.33 billion in the fiscal first quarter. The rise was due to an increase in all the components. Further, the reported figure outpaced the Zacks Consensus Estimate of $2.15 billion.

Investment management fees rose 2.7% year over year to $1.85 billion. Sales and distribution fees increased 3.5% year over year to $388.7 million. Shareholder-servicing fees rose 11.6% on a year-over-year basis to $70.9 million. Other revenues increased 47.4% year over year to $19.6 million.

Total operating expenses increased nearly 1% year over year to $2.05 billion. The rise was due to an increase in all the components except occupancy costs and amortization of intangible assets.

Franklin reported an operating margin of 12.1% compared with 9.7% in the year-ago quarter.

Franklin’s AUM Rises

As of Dec. 31, 2025, total AUM was $1.68 trillion, up 1.4% sequentially.

Franklin’s long-term net inflows were $28 billion in the reported quarter against an outflow of $11.9 billion in the prior quarter.

The average AUM was $1.67 trillion, which increased 2.6% on a sequential basis.

Franklin’s Capital Position

As of Dec. 31, 2025, cash and cash equivalents and investments were $6.2 billion, while total stockholders' equity was $13.1 billion.

Franklin’s Capital Distribution

In the reported quarter, Franklin repurchased 1.8 million shares for $41.9 million.

Major Developments for Franklin

In October 2025, the company completed the acquisition of Apera Asset Management, a pan-European private credit firm. The transaction significantly expanded its alternative credit assets under management by more than $90 billion and strengthened its direct lending capabilities across Europe’s growing lower middle market.

The addition of Apera enhances BEN’s global alternative credit platform alongside Benefit Street Partners in the United States and Alcentra in Europe, broadening its geographic reach and private credit expertise.

Our View on Franklin

Franklin’s rising AUM, improved revenues and disciplined expense management reflect steady operational progress. Its efforts to diversify business through acquisitions and strengthen its distribution platform continue to support long-term growth. However, expense pressure may weigh on near-term performance.

Franklin Resources, Inc. Price, Consensus and EPS Surprise

Franklin Resources, Inc. price-consensus-eps-surprise-chart | Franklin Resources, Inc. Quote

Currently, Franklin carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Asset Managers

BlackRock’s BLK fourth-quarter 2025 adjusted earnings of $13.16 per share handily surpassed the Zacks Consensus Estimate of $12.39. The figure reflects a 10.3% rise from the year-ago quarter.

BLK’s results benefited from a rise in revenues. The AUM balance witnessed robust year-over-year growth, reaching a record high of $14.04 trillion, driven by net inflows. However, higher expenses created a headwind.

Invesco’s IVZ fourth-quarter 2025 adjusted earnings of 62 cents per share surpassed the Zacks Consensus Estimate of 57 cents. The bottom line increased 19.2% from the prior-year quarter.

The results have been primarily aided by an increase in adjusted revenues. Moreover, growth in the AUM balance to record levels supported the results to an extent. However, an increase in adjusted operating expenses was a headwind for IVZ.

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This article originally published on Zacks Investment Research (zacks.com).

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