Franklin Resources, Inc.’s BENshares have dropped 21.4% in the past year compared with the industry’s gain of around 13.4%, on rising investors’ concerns due to persistent net outflows recorded by the company.
Investment management fees have been Franklin’s biggest source of revenues, accounting for about 68%, for the past few years.
ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE for the trailing 12-month period is 14.66% for Franklin as compared with the S&P 500 average of 16.56%. Thus, this investment manager reinvests its earnings inefficiently, which might drag it to a relatively disadvantageous position.
Further, Franklin has been witnessing downward revisions, of late. The Zacks Consensus Estimate for earnings of $3.17 for fiscal 2018 declined 2.8% over the last 60 days. For fiscal 2019, it moved down 6.8% to $3.28 during the same time frame. Notably, the company witnessed historical (3-5 years) earnings per share negative growth of 4.3% compared with nearly positive growth of 4% for the industry.
The stock currently carries a Zacks Rank #3 (Hold) with an unimpressive Momentum Score of C. Our research shows that stocks with a Momentum Scoreof A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential. Hence, the stock does not look promising at present.