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Should Value Investors Buy Franklin Resources (BEN) Stock?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Franklin Resources (BEN) is a stock many investors are watching right now. BEN is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.

Another valuation metric that we should highlight is BEN's P/B ratio of 1.66. 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 stock's P/B looks solid versus its industry's average P/B of 1.72. Over the past 12 months, BEN's P/B has been as high as 1.78 and as low as 1.43, with a median of 1.63.

Finally, we should also recognize that BEN has a P/CF ratio of 10.16. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. BEN's P/CF compares to its industry's average P/CF of 12.50. BEN's P/CF has been as high as 21.71 and as low as 8.34, with a median of 16.15, all within the past year.

These are only a few of the key metrics included in Franklin Resources's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, BEN looks like an impressive value stock at the moment.


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