Franklin Resources Inc (BEN)

Franklin Resources Inc. (BEN): A Comprehensive Overview

Company Profile:

History:

• Founded in 1947 by Rupert H. Johnson Sr. as Franklin Distributors, Inc.
• Initially focused on distributing shares of Franklin Growth Fund.
• Expanded into mutual funds and later into other investment products.
• Acquired Templeton, Galbraith & Hansberger in 1992, forming Franklin Templeton Investments.
• Listed on NYSE as BEN in 1970.

Core Business Areas:

• Global Investment Management: Offers a wide range of mutual funds, ETFs, alternative investments, and private wealth solutions.
• Retirement Solutions: Provides retirement plans and investment solutions for individuals and institutions.
• Institutional Intermediaries: Serves as a distributor of investment products to institutional investors.
• Other Businesses: Includes life insurance, annuities, and distribution of third-party products.

Leadership Team:

• CEO & President: Jenny Johnson
• Chairman: Greg Johnson
• Other key executives: Matthew Cogan (CFO), Mark Bao (Head of Investments), and Angela Pecoraro (Head of Distribution)

Top Products and Market Share:

• Top product lines include Templeton Global Bond Fund, Franklin Income Fund, and Franklin Balanced Fund.
• Market share:
  • Global asset management: ~2.9%
  • US mutual fund industry: ~3.5%
  • US ETF industry: ~0.5%

Competition:

• BlackRock (BLK)
• Vanguard Group (private)
• Fidelity Investments (private)
• State Street Global Advisors (STT)
• Invesco (IVZ)

Total Addressable Market:

• Global asset management industry: Estimated at $125 trillion in 2023.
• US mutual fund industry: Estimated at $20 trillion in 2023.

Financial Performance:

• Revenue: $6.4 billion in 2022, down 12% YoY.
• Net Income: $1.2 billion in 2022, down 21% YoY.
• Profit Margins: Net profit margin of 18.3% in 2022.
• Earnings per Share (EPS): $6.36 in 2022, down 19% YoY.
• Cash Flow: Operating cash flow of $1.9 billion in 2022.
• Balance Sheet: Strong with low debt-to-equity ratio.

Dividends and Shareholder Returns:

• Dividend History: BEN has a consistent dividend payout history, with a current annual dividend yield of 3.7%.
• Shareholder Returns: Total shareholder return of -12% in the past year, 3.5% in the past 5 years, and 6.5% in the past 10 years.

Growth Trajectory:

• Historical Growth: Revenue and net income have grown steadily over the past 10 years, with some fluctuations due to market conditions.
• Future Projections: Industry growth is expected to continue, but competition and market volatility pose challenges.
• Growth Initiatives: BEN is focusing on expanding its ETF business, enhancing its technology platform, and exploring new markets.

Market Dynamics:

• Industry trends: Increasing demand for passive investments, focus on ESG investing, and technological advancements.
• Market position: BEN is a well-established player with a strong brand, but faces intense competition.
• Adaptability: BEN is actively investing in technology and innovation to stay ahead of the curve.

Key Challenges and Opportunities:

Challenges:

• Managing assets under management (AUM) in a volatile market.
• Adapting to changing investor preferences and technological advancements.
• Competition from larger and more diversified asset managers.

Opportunities:

• Growth in the ETF market.
• Expansion into new markets and product categories.
• Strategic partnerships and acquisitions.

Recent Acquisitions (last 3 years):

• L&T Investment Management (2021): Acquired a majority stake in L&T Investment Management to expand its presence in the Indian market.
• Lexion Capital Management (2021): Acquired a minority stake in Lexion Capital Management to strengthen its alternative investment capabilities.
• Baring Asset Management (2022): Acquired a 60% stake in Baring Asset Management to expand its global footprint and expertise in emerging markets.

AI-Based Fundamental Rating:

Overall Rating: 7.5/10

Justification:

• Strong financial performance and track record.
• Well-established brand and diversified product offerings.
• Active investment in technology and innovation.
• Exposure to growing markets and opportunities.

Sources:

• Franklin Resources Inc. website (https://www.franklinresources.com/)
• Bloomberg Terminal
• YCharts
• Yahoo Finance

Disclaimer:

This information is for educational purposes only and should not be considered investment advice. Please conduct your own research and consult with a financial professional before making any investment decisions.