A month has gone by since the last earnings report for Franklin Resources (BEN). Shares have added about 7.5% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Franklin Resources due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Franklin Resources, Inc. before we dive into how investors and analysts have reacted as of late.
Franklin Q2 Earnings Beat Estimates, Revenues Rise Y/Y
Franklin reported second-quarter fiscal 2026 (ended March 31, 2026) adjusted earnings of 71 cents per share, which surpassed the Zacks Consensus Estimate of 55 cents per share. Also, the bottom line compared favorably with 47 cents reported in the year-ago quarter.
Results benefited from higher revenues. However, a slight decline in assets under management and elevated expenses remained headwinds.
The results include certain items. After considering those, net income (GAAP basis) was $268.2 million, up 77.1% year over year.
Revenues & Expenses Increase Y/Y
Total operating revenues increased 8.7% year over year to $2.29 billion in the fiscal second quarter. The rise was due to an increase in all the components except other revenues. Further, the reported figure outpaced the Zacks Consensus Estimate of $2.18 billion.
Investment management fees rose 8.7% year over year to $1.82 billion. Sales and distribution fees increased 8.7% year over year to $396.6 million. Shareholder-servicing fees rose 11.4% on a year-over-year basis to $69 million. Other revenues decreased 9% year over year to $10 million.
Total operating expenses increased marginally year over year to $1.97 billion. The rise was due to an increase in compensation and benefits costs, sales, distribution and marketing costs, and general, administrative and other costs.
Franklin reported an operating margin of 14.1% compared with 6.9% in the year-ago quarter.
AUM Rises
As of March 31, 2026, total AUM was $1.68 trillion, down marginally on a sequential basis.
Franklin’s long-term net inflows were $16.9 billion in the reported quarter compared with $28 billion in the prior quarter.
The average AUM was $1.70 trillion, which increased 1.5% on a sequential basis.
Capital Position
As of March 31, 2026, cash and cash equivalents and investments were $6.2 billion, while total stockholders' equity was $13.1 billion.
Capital Distribution
In the reported quarter, Franklin repurchased 2.3 million shares for $57.1 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
VGM Scores
At this time, Franklin Resources has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock has a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Franklin Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Franklin Resources is part of the Zacks Financial - Investment Management industry. Over the past month, MSCI (MSCI), a stock from the same industry, has gained 0.9%. The company reported its results for the quarter ended March 2026 more than a month ago.
MSCI reported revenues of $850.8 million in the last reported quarter, representing a year-over-year change of +14.1%. EPS of $4.55 for the same period compares with $4.00 a year ago.
MSCI is expected to post earnings of $4.82 per share for the current quarter, representing a year-over-year change of +15.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for MSCI. Also, the stock has a VGM Score of D.
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This article originally published on Zacks Investment Research (zacks.com).