Franklin Resources, Inc. BEN appears to be a solid investment option now on the back of prudent cost management and diversification strategies. The company’s relatively strong distribution platform and well-planned acquisitions are anticipated to yield positive results for the stock.
Franklin has a decent earnings surprise history. It beat the Zacks Consensus Estimate in two of the trailing four quarters and posted in-line results in one.
Also, the stock has been witnessing upward estimate revisions, reflecting analysts’ optimism about its prospects. Over the past 30 days, the Zacks Consensus Estimate for fiscal 2019 and 2020 increased 6.7% and 6.4%, respectively. Thus, it currently flaunts a Zacks Rank #1 (Strong Buy).
Shares of Franklin have gained 8.9% in the past six months, outperforming 8.3% growth recorded by the industry.
Why Franklin is an Attractive Pick
Prudent Expense Management: Franklin recorded 7%, 14% and 3% decline in operating expenses in fiscals 2015, 2016 and 2017, respectively. While potential investments in the technology front escalated expenses in fiscal 2018 (3-5%), a 2% drop in expenses was recorded in the first six months of fiscal 2019. Notably, management expects 2-3% decline in expenses in fiscal 2019. Also, cost-cutting initiatives will likely improve the bottom line in the near term.
Steady Capital Deployment: Franklin returns sufficient capital to its shareholders through dividends and share repurchases. Notably, in April 2018, the company announced an additional repurchase authorization of up to 80 million shares. Also, it paid a special cash dividend of $3 per share. Moreover, driven by a healthy liquidity position, the company has hiked its dividend every year since its inception in 1981, the latest being the 13% increase in December 2018.
Leverage: Franklin’s debt/equity ratio is 0.07 compared with the industry average of 0.27, reflecting lower debt burden compared with the industry. It highlights the company’s sound financial flexibility.
Superior Return on Equity (ROE): Franklin’s ROE of 14.24% compared with the industry average of 12.92%, indicates the company’s strong position over its peers.
Stocks to Consider
Shares of T. Rowe Price Group, Inc. TROW, which sports a Zacks Rank #1, have gained more than 4% over the past six months. The Zacks Consensus Estimate for the stock has climbed nearly 13.5% to $7.49 over the past 30 days, for 2019. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Cohen & Steers Inc CNS has rallied more than 33% in six months’ time. The Zacks Consensus Estimate for the stock has climbed 5.6% over the past 30 days, for 2019. It carries a Zacks Rank #1.
Shares of SEI Investments Company SEIC have appreciated more than 9% in the past three months. The Zacks Consensus Estimate for the stock has climbed 7.1% over the last 30 days for 2019. The stock sports a Zacks Rank #1, at present.
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