What Awaits Franklin Resources (BEN) in Fiscal Q2 Earnings?
Franklin Resources BEN is scheduled to report second-quarter fiscal 2022 results on May 3. BEN’s results are anticipated to indicate flat earnings while revenues are expected to decline from the last comparable quarterly reports.
In the last-reported quarter, Franklin’s earnings beat the Zacks Consensus Estimate on top-line strength. Higher assets under management (“AUM”) balance was a positive. However, rising expenses were a major drag.
Franklin’s earnings beat estimates in all the trailing four quarters, the average surprise being 25.6%.
Franklin Resources, Inc. Price and EPS Surprise
Franklin Resources, Inc. price-eps-surprise | Franklin Resources, Inc. Quote
BEN’s activities in the to-be-reported quarter were inadequate to win analysts’ confidence. The Zacks Consensus Estimate for earnings of 79 cents per share for the fiscal second quarter has moved down 3.7% in the past 30 days. Also, the figure remains flat compared with the prior quarter's reported figure. The consensus estimate for revenues is pegged at $2.03 billion, suggesting a decline of 2.1% from the last comparable quarterly reported number.
Other Key Estimates & Factors for Fiscal Q2
In December 2021, Franklin closed the acquisition of O’Shaughnessy Asset Management, LLC, which has enhanced its presence in the separately managed account space and helped expand its custom solutions’ capabilities. This might have resulted in an increase in the company’s investment management fees in the to-be-reported quarter.
The onset of the Russia-Ukraine war has hurt investor sentiments and dampened the equity market's performance. On the other hand, fixed income markets are likely to produce low returns in the January-March period. Hence, Franklin is likely to have witnessed a decrease in AUM due to overall outflows in equities and fixed income during the to-be-reported quarter, besides modest client activities.
In fact, Franklin has been recording net outflows every month in the fiscal second quarter of 2022, primarily due to unfavorable equity markets. The preliminary month-end AUM of $1.47 billion, as of Mar 31, 2022, compares unfavorably with $1.58 billion as of Dec 31, 2021.
Further, the Zacks Consensus Estimate for Franklin’s AUM for the fiscal second quarter is pegged at $1.48 billion, indicating a fall of 6.3% from the prior quarter’s reported figure.
On the cost front, while Franklin achieved 100% run-rate cost synergies of $300 million from the Legg Mason acquisition in first-quarter fiscal 2022, the company’s initiatives to leverage ongoing technological advancements might have resulted in cost upsurges. Further, the company is expected to have incurred higher employee expenses due to rising salaries on account of inflation.
Earnings Whispers
The proven Zacks model does not predict an earnings beat for Franklin this time around. This is because Franklin does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Franklin has an Earnings ESP of +0.00%.
Zacks Rank: Franklin currently carries a Zacks Rank of 4 (Sell).
Upcoming Releases
Fidelity National Information Services FIS is slated to announce first-quarter 2022 results on May 4. The company currently carries a Zacks Rank #3.
FIS’ earnings estimates for the to-be-reported quarter have remained unchanged over the 30 days.
Lending Tree TREE is slated to announce first-quarter 2022 results on May 5. The company currently carries a Zacks Rank #3.
TREE’s earnings estimates for the to-be-reported quarter have remained unchanged over the 30 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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