Franklin Shares Up 6.2% in the Past 3 Months: How to Play the Stock?

Franklin Resources, Inc. BEN has gained 6.2% in the past three months, outperforming the industry’s 8.1% decline and the S&P 500 Index’s 2.7% dip. In contrast, peers like Grupo Aval Acciones y Valores AVAL lost 1.4%, while Invesco Ltd IVZ plunged 17.3% in the same time frame.

 

Additionally, Franklin acquired Lexington Partners in 2022, deepening its exposure to private equity and alternative investments. These acquisitions have strengthened Franklin’s ability to diversify revenue streams, reducing reliance on traditional investment management fees.

 

Steady AUM Growth: Franklin has demonstrated consistent AUM growth, recording a compound annual growth rate (CAGR) of 3.1% over the past five fiscal years (ending fiscal 2024). While AUM declined in fiscal 2022, the company has since recovered, with growth continuing in the first six months of fiscal 2025.

 

Franklin’s efforts to diversify into alternative asset classes are seeing increasing client demand and are expected to propel AUM expansion in the upcoming period. Additionally, its regionally focused distribution model has strengthened its non-U.S. business, contributing to favorable net flows. Also, strategic acquisitions keep supporting AUM's growth. 

 

Strong Liquidity: Franklin has a solid balance sheet, with $5 billion in liquidity as of March 31, 2025. This includes cash and cash equivalents, receivables, and investments, ensuring financial flexibility in managing operations. Importantly, the company has no short-term debt, reducing the risk of immediate financial strain. Its earnings strength, combined with a stable liquidity position, reflects a lower likelihood of defaulting on interest or debt repayments, even if market conditions deteriorate. 

 

Capital Distribution: Franklin’s capital distribution activities have been impressive over the years. In December 2023, the company announced a repurchase authorization of 27.2 million shares of its common stock. As of March 31, 2025, 29.2 million shares remained available for repurchase under its existing authorization. Moreover, it announced a 3.2% hike in its common stock dividend in December 2024. BEN has a current yield of 5.95%, higher than its peers IVZ’s 5.74% and AVAL’s 3.65%. 

 

These capital distribution activities, combined with a decent liquidity profile, will likely stoke investors’ confidence in stock.

Volatility in Investment Management Fees: Franklin’s investment management fees, its largest revenue source (79.3% as of March 31, 2025), have exhibited fluctuations over the years. These fees depend on the level and mix of AUM and the types of services provided.

 

While the company recorded declines in fiscal 2020 and fiscal 2023, investment management fees increased in fiscal 2021 and fiscal 2022. The uptrend continued in fiscal 2024 and the first six months of fiscal 2025. However, changes in AUM that remain exposed to market fluctuations, foreign exchange translations, regulatory shifts, and business slowdowns could negatively impact Franklin’s financials in the future.

Rising Cost Base: Franklin’s escalating cost base remains a concern. The expenses have grown at a CAGR of 7.2% over the last three fiscal years (ending fiscal 2024). The uptrend continued in the first six months of fiscal 2025, driven by investments in technological advancements and new talent acquisitions. These higher expenses are likely to pressure Franklin’s bottom-line growth in the upcoming period.

Franklin is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 10.14X, significantly below the industry’s P/E of 16.42X.

 

 

 

BEN is trading at a premium compared to its peers, Invesco and Grupo Aval Acciones Y Valores, P/E multiple of 6.68X and 8.22X, respectively.

 

The company’s efforts to diversify its business into asset classes that are seeing growing client demand, like alternative asset classes, are expected to propel AUM growth. Also, a solid balance sheet enables sustainable capital distributions. 

 

However, volatility in investment management fees due to market fluctuations is concerning as it is a major component of Franklin’s total revenues. This might impact the company’s revenues in the near term. 

 

 

 

Also, the company’s earnings estimates for 2025 and 2026 have been revised downward over the past week, reflecting a cautious stance from analysts. (See the Zacks Earnings Calendar to stay ahead of market-making news.) 

 

 

 

Thus, despite favorable valuations, the BEN stock warrants caution at the moment. Those who own the stock can continue holding it for now, as it is likely to generate a healthy return over the long run.

 

BEN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Franklin Resources, Inc. (BEN) has gained 8.4% in the past three months, outperforming the industry’s 6.1% decline and the S&P 500 Index’s 1.2% dip. In contrast, peers like Grupo Aval Acciones y Valores (AVAL) lost 7.0%, while Invesco Ltd (IVZ) plunged 16.5% in the same timeframe. 

Price Performance

 

Does the BEN stock have more upside left despite showing recent strength in share price? Let us try to find out.

 

Factors Likely to Drive BEN Stock Higher

 

Strategic Acquisition: Franklin has expanded its investment capabilities through targeted acquisitions, reinforcing its presence in alternative asset classes. The company completed the Putnam Investments acquisition in January 2024, enhancing its defined contribution AUM to over $100 billion.

 

Additionally, Franklin acquired Lexington Partners in 2022, deepening its exposure to private equity and alternative investments. These acquisitions have strengthened Franklin’s ability to diversify revenue streams, reducing reliance on traditional investment management fees.

 

Steady AUM Growth: Franklin has demonstrated consistent AUM growth, recording a compound annual growth rate (CAGR) of 3.1% over the past five fiscal years (ending fiscal 2024). While AUM declined in fiscal 2022, the company has since recovered, with growth continuing in the first six months of fiscal 2025.

 

Franklin’s efforts to diversify into alternative asset classes are seeing increasing client demand and are expected to propel AUM expansion in the upcoming period. Additionally, its regionally focused distribution model has strengthened its non-U.S. business, contributing to favorable net flows. 

 

Strong Liquidity: Franklin has a solid balance sheet, with $5 billion in liquidity as of March 31, 2025. This includes cash and cash equivalents, receivables, and investments, ensuring financial flexibility in managing operations. Importantly, the company has no short-term debt, reducing the risk of immediate financial strain. Its earnings strength, combined with a stable liquidity position, reflects a lower likelihood of defaulting on interest or debt repayments, even if market conditions deteriorate. Also, strategic acquisitions keep supporting AUM's growth.

 

Capital Distribution: Franklin has consistently prioritized shareholder returns, maintaining a quarterly dividend of 32 cents per share. In December 2024, the company raised its dividend by 3.2%, reinforcing its commitment to rewarding investors. Additionally, the company has been actively repurchasing shares, with 0.5 million shares repurchased in the second quarter of 2025. As of March 31, 2025, 29.2 million shares remained available for repurchase under its existing authorization. 

 

The company enjoys a decent balance sheet position. As of March 31, 2025, the company had no short-term debt. Its liquidity (comprising cash and cash equivalents, receivables and investments) as of the same date was $5 billion.  BEN has a current yield of 5.95%, higher than its peers IVZ’s 5.74% and AVAL’s 3.65%. 

 

These capital distribution activities, combined with a decent liquidity profile, will likely stoke investors’ confidence in stock.

 

Near-Term Hurdles for BEN

 

Volatility in Investment Management Fees: Franklin’s investment management fees, its largest revenue source (79.3% as of March 31, 2025), have exhibited fluctuations over the years. These fees depend on the level and mix of AUM and the types of services provided.

 

While the company recorded declines in fiscal 2020 and fiscal 2023, investment management fees increased in fiscal 2021 and fiscal 2022. The uptrend continued in fiscal 2024 and the first six months of fiscal 2025. However, changes in AUM that remain exposed to market fluctuations, foreign exchange translations, regulatory shifts, and business slowdowns could negatively impact Franklin’s financials in the future.

 

Rising Cost Base: Franklin’s escalating cost base remains a concern. The expenses have grown at a CAGR of 7.2% over the last three fiscal years (ending fiscal 2024). The uptrend continued in the first six months of fiscal 2025, driven by investments in technological advancements and new talent acquisitions. These higher expenses are likely to pressure Franklin’s bottom-line growth in the upcoming period.

 

Earnings per share estimate for the current quarter has declined from 0.47 to 0.46 over the past seven days, reflecting analyst concerns over earnings pressure. Similarly, the next quarter’s estimate has fluctuated, reinforcing uncertainty in Franklin’s near-term profitability.

 

BEN Stock Trades at a Discount

 

Franklin is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 10.14X, significantly below the industry’s P/E of 16.42X.

 

BEN is trading at a premium compared to its peers, Invesco and Grupo Aval Acciones Y Valores, P/E multiple of 6.68X and 8.22X, respectively.

 

How Should You Play BEN Stock?

 

The company’s efforts to diversify its business into asset classes that are seeing growing client demand, like alternative asset classes, are expected to propel AUM growth. Also, a solid balance sheet enables sustainable capital distributions. (See the Zacks Earnings Calendar to stay ahead of market-making news.) 

 

However, volatility in investment management fees due to market fluctuations is concerning as it is a major component of Franklin’s total revenues. This might impact the company’s revenues in the near term. 

 

Sales Estimates

 

Also, the company’s earnings estimates for 2025 and 2026 have been revised downward over the past week, reflecting a cautious stance from analysts.

 

Estimate Revision Trend

 

Thus, despite favorable valuations, the BEN stock warrants caution at the moment. Those who own the stock can continue holding it for now, as it is likely to generate a healthy return over the long run.

 

BEN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.