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Are Investors Undervaluing Franklin Resources (BEN) Right Now?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Franklin Resources (BEN). BEN is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.

Another notable valuation metric for BEN is its P/B ratio of 1.69. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.71. Within the past 52 weeks, BEN's P/B has been as high as 1.78 and as low as 1.43, with a median of 1.64.

Finally, investors should note that BEN has a P/CF ratio of 10.37. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 12.82. Over the past 52 weeks, BEN's P/CF has been as high as 21.71 and as low as 8.34, with a median of 10.41.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Franklin Resources is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BEN feels like a great value stock at the moment.


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