Franklin Resources (BEN)
seems to have been positioned well for the recent market, thanks to its strong position in fixed income products just as the market panic pushed investors into safe havens. Nevertheless, analysts believe the company remains in a good spot for the coming market on its breadth of expertise and financial might.
Franklin Resources is a holding company that operates as Franklin Templeton Investments. The company offers investment choices under the Franklin, Templeton, Mutual Series, Bissett, Fiduciary and Darby brand names.
Franklin Templeton’s primary business and operating segment is investment management and related services, which it offers worldwide through products that include U.S.- and non-U.S.-registered open-end and closed-end funds, unregistered funds, and institutional, high net-worth and separately-managed accounts.
As of Sept. 30, 2011, the firm had $659.9 billion in assets under management with approximately 24.8 million billable shareholder accounts worldwide.
In a secondary business and operating segment, banking/finance, Franklin Templeton provides clients with select retail banking, private banking and consumer lending services through its banking and finance subsidiaries.
Franklin Resources has a market cap of $23.58 billion in a sector, capital markets, where the average company size is $7.41 billion. Its trailing 12-month P/E ratio is 12.65 and its five-year projected price-to-earnings-growth (PEG) ratio is 1.35, same as the sector.
Its projected earnings per share growth for the coming year is 8.16 percent, compared to a sector average of 23.70 percent.
Analysts are positive on BEN, with buy or outperform calls from Sandler O’Neill, Stifel Nicolaus, Standard & Poor’s Equity Research, Morgan Stanley, and B.P. Bernstein.
“We think BEN is one of the best-managed asset gatherers, with a balance sheet characterized by limited debt and ample cash. We have a favorable view of its operating free cash flow, and we think it gained a competitive advantage in the market as the industry shifted toward fixed income assets, where BEN has a strong track record,” S&P analysts wrote in early May.
“BEN's results reflect good relative fund performance, consistent revenues, and strategic cost management. The company has good product diversification among equities, fixed income and hybrid funds as well as a strong emphasis on International investments, which tend to carry higher fees. BEN continues to repurchase shares as a means of redeploying capital to shareholders. All told, we view the shares as undervalued at recent levels.”
Franklin Resources next reports on Aug. 1.
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