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Franklin (BEN) Q3 Earnings Surpass Estimates, AUM Increases
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Franklin Resources Inc.’s (BEN - Free Report) third-quarter fiscal 2024 (ended Jun 30, 2024) adjusted earnings of 60 cents per share beat the Zacks Consensus Estimate of 57 cents. The bottom line declined 5% year over year.
BEN’s results have benefited from a rise in revenues and an improvement in the assets under management (AUM) balance. However, higher expenses were headwinds.
Adjusted operating income was $424.9 million compared with the prior-year quarter’s $476.8 million.
Net income (GAAP) attributable to Franklin was $174 million, down 24% year over year.
Revenues & Expenses Rise
Total operating revenues moved up 8% year over year to $2.12 billion. The reported figure surpassed the Zacks Consensus Estimate of $2.09 billion.
Investment management fees grew 5% year over year to $1.69 billion. We projected the same to be $1.72 billion. Sales and distribution fees increased nearly 18% to $358.3 million. Our estimate for the metric was $328.6 million.
Shareholder-servicing fees surged 59% on a year-over-year basis to $61.8 million. Our estimate was $45.5 million. Other revenues inched up 1% to $12.9 million. We suggested other revenues to be $11.4 million.
Total operating expenses were up 15% year over year to $1.90 billion. Our estimate for the same was $1.92 billion.
Franklin reported an operating margin of 10.5% compared with 16% in the year-ago quarter.
AUM Increases
As of Jun 30, 2024, the total AUM was $1.65 trillion, up 15% year over year. Our estimate was $1.72 trillion. Franklin’s long-term net outflows were $3.2 billion in the reported quarter against an inflow of $0.2 billion in the year-ago quarter.
The average AUM was $1.63 trillion, up 15% from the prior quarter’s figure. We projected the average AUM to be $1.68 trillion.
Capital Position
As of Jun 30, 2024, cash and cash equivalents, along with investments, were $5.6 billion, while total stockholders' equity was $13.6 billion.
In the reported quarter, Franklin repurchased 4.3 million shares of its common stock for $101.5 million.
Our Viewpoint
BEN’s efforts to diversify its business into asset classes that are seeing growing client demand will likely propel AUM growth. Recently, Franklin announced plans to make a strategic minority investment in Envestnet, a significant industry platform. This will support the simplification of its operation and reduce long-term capital expenditure. However, a challenging operating backdrop and several geopolitical concerns are headwinds.
Franklin Resources, Inc. Price, Consensus and EPS Surprise
BlackRock, Inc.’s (BLK - Free Report) second-quarter 2024 adjusted earnings of $10.36 per share handily surpassed the Zacks Consensus Estimate of $9.96. The figure reflects a rise of 12% from the year-ago quarter.
BLK’s results benefited from a rise in revenues. AUM witnessed solid improvement driven by net inflows and market appreciation. However, higher expenses and a fall in non-operating income acted as headwinds for BLK.
Invesco’s (IVZ - Free Report) second-quarter 2024 adjusted earnings of 43 cents surpassed the Zacks Consensus Estimate of 41 cents. The bottom line increased 38.7% from the prior-year quarter’s figure.
IVZ’s results have been primarily aided by a decline in adjusted expenses. An increase in the assets under management (AUM) balance on decent inflows was a positive. However, marginally lower adjusted revenues hurt results to some extent.
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Franklin (BEN) Q3 Earnings Surpass Estimates, AUM Increases
Franklin Resources Inc.’s (BEN - Free Report) third-quarter fiscal 2024 (ended Jun 30, 2024) adjusted earnings of 60 cents per share beat the Zacks Consensus Estimate of 57 cents. The bottom line declined 5% year over year.
BEN’s results have benefited from a rise in revenues and an improvement in the assets under management (AUM) balance. However, higher expenses were headwinds.
Adjusted operating income was $424.9 million compared with the prior-year quarter’s $476.8 million.
Net income (GAAP) attributable to Franklin was $174 million, down 24% year over year.
Revenues & Expenses Rise
Total operating revenues moved up 8% year over year to $2.12 billion. The reported figure surpassed the Zacks Consensus Estimate of $2.09 billion.
Investment management fees grew 5% year over year to $1.69 billion. We projected the same to be $1.72 billion. Sales and distribution fees increased nearly 18% to $358.3 million. Our estimate for the metric was $328.6 million.
Shareholder-servicing fees surged 59% on a year-over-year basis to $61.8 million. Our estimate was $45.5 million. Other revenues inched up 1% to $12.9 million. We suggested other revenues to be $11.4 million.
Total operating expenses were up 15% year over year to $1.90 billion. Our estimate for the same was $1.92 billion.
Franklin reported an operating margin of 10.5% compared with 16% in the year-ago quarter.
AUM Increases
As of Jun 30, 2024, the total AUM was $1.65 trillion, up 15% year over year. Our estimate was $1.72 trillion. Franklin’s long-term net outflows were $3.2 billion in the reported quarter against an inflow of $0.2 billion in the year-ago quarter.
The average AUM was $1.63 trillion, up 15% from the prior quarter’s figure. We projected the average AUM to be $1.68 trillion.
Capital Position
As of Jun 30, 2024, cash and cash equivalents, along with investments, were $5.6 billion, while total stockholders' equity was $13.6 billion.
In the reported quarter, Franklin repurchased 4.3 million shares of its common stock for $101.5 million.
Our Viewpoint
BEN’s efforts to diversify its business into asset classes that are seeing growing client demand will likely propel AUM growth. Recently, Franklin announced plans to make a strategic minority investment in Envestnet, a significant industry platform. This will support the simplification of its operation and reduce long-term capital expenditure. However, a challenging operating backdrop and several geopolitical concerns are headwinds.
Franklin Resources, Inc. Price, Consensus and EPS Surprise
Franklin Resources, Inc. price-consensus-eps-surprise-chart | Franklin Resources, Inc. Quote
Currently, Franklin carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
BlackRock, Inc.’s (BLK - Free Report) second-quarter 2024 adjusted earnings of $10.36 per share handily surpassed the Zacks Consensus Estimate of $9.96. The figure reflects a rise of 12% from the year-ago quarter.
BLK’s results benefited from a rise in revenues. AUM witnessed solid improvement driven by net inflows and market appreciation. However, higher expenses and a fall in non-operating income acted as headwinds for BLK.
Invesco’s (IVZ - Free Report) second-quarter 2024 adjusted earnings of 43 cents surpassed the Zacks Consensus Estimate of 41 cents. The bottom line increased 38.7% from the prior-year quarter’s figure.
IVZ’s results have been primarily aided by a decline in adjusted expenses. An increase in the assets under management (AUM) balance on decent inflows was a positive. However, marginally lower adjusted revenues hurt results to some extent.