What awaits Franklin Resources (BEN) in fiscal second quarter earnings? – May 2, 2022

Franklin Resources (Well Free Report) is set to release its second-quarter fiscal 2022 results on May 3. BEN’s results are expected to show stable earnings while revenue is expected to decline from the latest comparable quarterly reports.

In the most recently reported quarter, Franklin’s earnings beat Zacks’ consensus estimate of revenue strength. The increase in the balance of assets under management (“AUM”) was positive. However, rising spending has been a major drag.

Franklin’s earnings have exceeded estimates for the past four quarters, with the average surprise being 25.6%.

BEN’s activities in the reportable quarter were not enough to win analysts’ confidence. Zacks’ consensus estimate for fiscal second-quarter earnings of 79 cents per share is down 3.7% in the past 30 days. In addition, the figure remains stable compared to the figure reported for the previous quarter. The consensus revenue estimate is pegged at $2.03 billion, suggesting a decline of 2.1% from the last comparable quarterly figure released.

Other estimates and key factors for the second quarter of the year

In December 2021, Franklin completed the acquisition of O’Shaughnessy Asset Management, LLC, which strengthened its presence in the separately managed account space and helped expand the capabilities of its custom solutions. This could have resulted in an increase in the company’s investment management fees in the reportable quarter.

The start of the Russian-Ukrainian war hurt investor confidence and dampened stock market performance. On the other hand, fixed income markets are expected to produce low returns in the January-March period. As a result, Franklin likely witnessed a decrease in assets under management due to overall equity and fixed income outflows in the reportable quarter, in addition to modest client activity.

In fact, Franklin saw net outflows every month during the second fiscal quarter of 2022, primarily due to unfavorable stock markets. Preliminary month-end AUM of $1.47 billion, as of March 31, 2022, compares unfavorably to $1.58 billion as of December 31, 2021.

Additionally, Zacks’ consensus estimate for Franklin’s assets under management for the fiscal second quarter is set at $1.48 billion, indicating a 6.3% decline from the prior quarter’s reported figure.

On the cost side, while Franklin realized 100% cost synergies of $300 million from the acquisition of Legg Mason in the first quarter of fiscal 2022, the company’s initiatives to leverage advances current technologies could have led to cost increases. In addition, the company should have incurred higher personnel costs due to higher wages due to inflation.

Earnings Whispers

Zacks’ proven model does not predict a beat in profits for Franklin this time around. This is because Franklin lacks the right combination of the two key ingredients – a positive win ESP and a Zacks rank #3 (Hold) or higher – to increase the chances of a win beat.

You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.

ESP Earnings: Franklin has an ESP on gains of +0.00%.

Zacks Rank: Franklin currently wears a Zacks rank of 4 (sell).

Upcoming releases

Fidelity National Information Services (FIS Free Report) is expected to announce first quarter 2022 results on May 4. The company currently carries a Zacks Rank #3.

FIS’ earnings estimates for the reportable quarter remained unchanged in the 30 days.

loan tree (TREE Free Report) is expected to announce first quarter 2022 results on May 5. The company currently carries a Zacks Rank #3.

TREE’s earnings estimates for the quarter to report remained unchanged in the 30 days. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stay on top of upcoming earnings announcements with Zacks Earnings Calendar.

Comments are closed.