Franklin (BEN) to Post Q1 Earnings: What's in the Cards?
Franklin Resources Inc. BEN is scheduled to report first-quarter fiscal 2024 results (ended Dec 31) on Jan 29, before market open. While BEN’s quarterly revenues are anticipated to decline from the year-ago level, earnings are expected to rise.
In the last reported quarter, Franklin’s earnings surpassed the Zacks Consensus Estimate on top-line strength compared with the prior quarter. However, rising expenses affected the bottom line to some extent. A dip in assets under management (AUM) was another major drag.
Franklin’s earnings beat the consensus estimate in three of the trailing four quarters and missed once, the average surprise being 11.62%.
Franklin Resources, Inc. Price, Consensus and EPS Surprise
Franklin Resources, Inc. price-consensus-eps-surprise-chart | Franklin Resources, Inc. Quote
BEN’s activities in the to-be-reported quarter were adequate to win analysts’ confidence. The Zacks Consensus Estimate for earnings of 56 cents per share for the first quarter of fiscal 2024 has moved 1.8% north over the past week. Also, the figure suggests a rise of 9.8% from the prior-year quarter.
The consensus estimate for revenues is pegged at $1.91 billion, suggesting a decline of 2.7%.
Factors at Play
In the October-December quarter, the S&P 500 Index rose 11.2% from September-end levels, indicating favorable equity-market performance. Fixed-income markets, too, saw remarkable performances, with a rise in Bloomberg U.S. Aggregate Bond Index. Hence, the December-end quarter’s performances of asset managers are expected to have been positively impacted by solid market returns.
Per the monthly metrics data published by Franklin, its preliminary total AUM as of Dec 31, 2023, was $1.46 trillion, jumping 5.9% from Sep 30, 2023. Driven by the improvement in AUM balance, the company’s investment management fee is expected to have risen. However, the Zacks Consensus Estimate for investment management fee is pegged at $1.49 billion, indicating a decline of 8.8% on a sequential basis. Our estimate for the same is pegged at $1.57 billion.
The consensus estimate for sales and distribution fees of $306 million has remained flat from the prior quarter’s reported figure. We estimate the metric to be $292 million.
The consensus estimate for shareholder servicing fees of $40.5 million indicates a 9% rise. The Zacks Consensus Estimate for other revenues is pegged at $9.7 million, suggesting an increase of 19.5%. Our estimate for shareholder servicing fees and other revenues is pegged at $37.1 million and $9.8 million, respectively.
On the cost front, its initiatives to leverage ongoing technological advancements are likely to have led to cost upsurges. Franklin is also expected to have incurred higher employee expenses due to rising salaries on account of inflation.
Q1 Fiscal 2024 Guidance
The company expects compensation and benefits to be approximately $750 million, including performance fees and accelerated deferred compensation charges of $35 million. It forecasts performance fees to be around $50 million.
Information systems and technology expenses are anticipated to be flat at around $125 million on a sequential basis.
Occupancy expenses are projected to be $65 million.
General, administrative and other expenses are estimated to be $140 million.
Earnings Whispers
According to our proven model, the chances of BEN beating the Zacks Consensus Estimate for earnings this time are high. This is because it has the right combination of two key elements, a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
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 +2.85%.
Zacks Rank: Franklin currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Finance Stocks That Warrant a Look
Here are a couple of other finance stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time around.
T. Rowe Price Group, Inc. TROW is expected to report fourth-quarter and full-year 2023 results on Feb 8. It has an Earnings ESP of +3.85% and carries a Zacks Rank #3 at present.
Over the past 30 days, the Zacks Consensus Estimate for TROW’s quarterly earnings has moved 6% north to $1.58 per share.
Principal Financial Group, Inc. PFG is scheduled to release quarterly numbers on Feb 12. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +2.00%.
PFG’s quarterly earnings estimates have been revised 1% downward to $1.70 over the past week.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Franklin Resources, Inc. (BEN) : Free Stock Analysis Report
T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report
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