Franklin's March AUM Advances

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Franklin Resources Inc. (BEN) declared preliminary assets under management (:AUM) of $823.7 billion by its subsidiaries for Mar 2013. The company’s AUM rose 1.2% from $813.8 billion as of Feb 28, 2013. Moreover, it increased 13.5% from $725.7 billion as of Mar 31, 2012.

Month-end total equity assets came in at $319.9 billion, inching up 0.8% from the prior month and increasing 6.7% on a year-over-year basis. Of the total equity assets, around 72.2% were from international sources while the remaining 27.8% were from the U.S.

Franklin’s total fixed income assets were $369.2 billion, up 1.2% from $364.7 billion as of Feb 28, 2013 and 16.6% from $316.6 billion as of Mar 31, 2012. Overall, tax-free assets for Franklin accounted for only 22.9% of the fixed income assets, while the remaining 77.1% were taxable.

Franklin recorded $129.2 billion in hybrid assets, which scaled up 2.8% from $125.7 billion in the prior month and surged 24.8% from $103.5 billion in the year-ago month.

Cash management funds for Franklin were reported at $5.4 billion, down 8.5% compared with the prior month and 5.3% from the prior-year month.

Further, Legg Mason Inc. (LM) and Invesco Ltd. (IVZ) are expected to release their preliminary AUM for the month of Mar 2013 later this week.

Franklin has a global footprint and well diversified AUM, which is stragically excellent for the company. Further, Franklin is expected to benefit from its strong balance sheet.

However, regulatory restrictions and sluggish economic growth can adversely affect AUM improvement and increase costs.

Franklin is expected to announce its fiscal second quarter 2013 results on Apr 29. The Zacks Consensus Estimate for the quarter is pegged at $2.44 per share. The Zacks Earnings ESP  (Read: Zacks Earnings ESP: A Better Method) for Franklin is + 2.87% for the fiscal second quarter. This, along with its Zacks Rank #2 (Buy), makes us confident for a positive earnings surprise.

Among other asset managers, BlackRock, Inc. (BLK) is also likely to deliver a positive earnings surprise this quarter as our model shows it has the right combination of elements – an Earnings ESP of +1.68% and a Zacks Rank #2.
 

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