Franklin Resources (BEN)

Global investment management firm Franklin Resources (NYSE:BEN) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 5.7% year on year to $1.82 billion. Its non-GAAP profit of $0.67 per share was 14% above analysts’ consensus estimates.

Company Overview

Operating under the widely recognized Franklin Templeton brand since 1947, Franklin Resources (NYSE:BEN) is a global investment management organization that offers financial services and solutions to individuals, institutions, and wealth advisors worldwide.

Custody banks safeguard financial assets and provide services like settlement, accounting, and regulatory compliance for institutional investors. Growth opportunities stem from increasing global assets under custody, demand for data analytics, and blockchain technology adoption for settlement efficiency. Challenges include fee pressure from large clients, substantial technology investment requirements, and competition from both traditional players and fintech firms entering the space.

Franklin Resources competes with other major asset managers including BlackRock (NYSE:BLK), T. Rowe Price (NASDAQ:TROW), Invesco (NYSE:IVZ), and State Street Global Advisors (NYSE:STT), as well as with diversified financial services firms like Fidelity Investments and Vanguard Group.

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Franklin Resources’s revenue grew at a solid 11.6% compounded annual growth rate over the last five years. Its growth beat the average financials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Franklin Resources’s recent performance shows its demand has slowed as its annualized revenue growth of 4.8% over the last two years was below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Franklin Resources reported year-on-year revenue growth of 5.7%, and its $1.82 billion of revenue exceeded Wall Street’s estimates by 4.8%.

Assets Under Management (AUM) encompasses all client funds under a firm's investment management umbrella. The recurring fee structure on these assets provides consistent revenue generation, offering financial stability even during periods of poor investment returns, though sustained underperformance can impact future asset flows.

Franklin Resources’s AUM has grown at an annual rate of 1.6% over the last five years, much worse than the broader financials industry and slower than its total revenue. When analyzing Franklin Resources’s AUM over the last two years, we can see its assets dropped by 11.4% annually. Fundraising or short-term investment performance were net detractors to the company over this shorter period since assets underperformed than total revenue.

Franklin Resources’s AUM punched in at $1.66 trillion this quarter, beating analysts’ expectations by 9.1%. This print was 5.4% higher than the same quarter last year.

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

Over the last five years, Franklin Resources’s operating margin has risen by 20.7 percentage points, going from 29.7% to 9%. Luckily, it seems the company has recently taken steps to address its expense base as its operating margin expanded by 2.8 percentage points on a two-year basis.

Franklin Resources’s operating margin came in at 4.7% this quarter. This result was 13.5 percentage points better than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Franklin Resources, its EPS declined by 3.3% annually over the last five years while its revenue grew by 11.6%. This tells us the company became less profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Franklin Resources, its two-year annual EPS declines of 7.4% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Franklin Resources reported adjusted EPS of $0.67, up from $0.59 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Franklin Resources’s full-year EPS of $2.22 to grow 16.3%.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, Franklin Resources has averaged an ROE of 8.7%, uninspiring for a company operating in a sector where the average shakes out around 10%.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Franklin Resources has no debt, so leverage is not an issue here.

We were impressed by how significantly Franklin Resources blew past analysts’ AUM expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $23.10 immediately after reporting.

Updated: December 4, 2025 at 11:08 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Franklin Resources.

Franklin Resources falls short of our quality standards. Although its revenue growth was solid over the last five years, it’s expected to deteriorate over the next 12 months and its declining pre-tax profit margin shows the business has become less efficient. And while the company’s AUM growth was impressive over the last five years, the downside is its declining EPS over the last five years makes it a less attractive asset to the public markets.

Franklin Resources’s P/E ratio based on the next 12 months is 8.9x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $24.73 on the company (compared to the current share price of $23.14).