FRANKLIN RESOURCES, INC. (BEN): what the price requires
At today's price, FRANKLIN RESOURCES, INC. (BEN) is priced for +13.5% earnings growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/BEN
Headline
| Field | Value |
|---|---|
| Ticker | BEN |
| Company | FRANKLIN RESOURCES, INC. |
| Current price | $32.85/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | fee-financial |
| Implied earnings growth | 13.5% |
| Price-to-earnings | 20.2x |
| Earnings yield | 5.0% |
A hybrid: a fee franchise alongside a sizeable balance sheet, valued here on the fee annuity.
Solve inputs: computed at a 11.6% cost of equity with 4% terminal growth over a 5-year stage, on a 5-year median GAAP earnings base; each 1pp of cost of equity moves the implied earnings growth ~3.5pp.
Reconcile: at the x-ray's 9.3% required return this reads ~4.5%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.44σ |
| cohort percentile (of 49 peers) | 41 |
| sustained it ~5 years at this level | 43% |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.72x | 5 | expensive |
| Earnings | 2.17x | 5 | expensive |
| Relative | 0.69x | 4 | justifies |
| Growth | 0.87x | 5 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.3%); the inversion above states its own rate.
Per-Model Detail (n=19)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $37.70 | 0.87x | yes | FCF base $0.9B, growth 4% (input: historical growth), terminal g 3.8%, WACC 8.2%, 5yr projection |
| DCF Exit Multiple | Growth | $33.68 | 0.98x | yes | Exit EV/EBITDA: 20.1x / 22.1x / 24.1x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $22.58 | 1.46x | yes | P/E 15.36x (blended: static sector reference 12x + trailing (TTM) 23x), scenarios: 12.9x / 15.4x / 17.8x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | $45.14 | 0.73x | yes | DPS $1.36, g=6.1% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3% |
| Two-Stage DDM | Growth | $48.29 | 0.68x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $15.30 | 2.15x | yes | BV/sh $23.40, ROE (TTM) 6.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $12.07 | 2.72x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $25.35 | 1.30x | yes | Rev $9.0B, growth 4% (input: historical growth; tapered), Terminal P/S: 1.6x / 1.9x / 2.2x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $45.85 | 0.72x | yes | EPS $1.31, growth 35% (input: historical EPS growth), PEG=0.66 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $16.46 | 2.00x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.10B × (1−22%) / WACC 8.2% → EPV (no growth) |
| Residual Income | Asset | $11.65 | 2.82x | yes | BV $23.40 + 5yr PV of (ROE (TTM) 6.1% − Kₑ 9.3%) × BV; BV grows 3.9%/yr |
| Graham Number | Asset | $26.26 | 1.25x | yes | √(22.5 × EPS $1.31 × BVPS $23.40) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | $15.13 | 2.17x | yes | FCF $933.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $10.22 | 3.21x | yes | SBC-adj FCF $0.70B (FCF $0.93B − SBC $0.24B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $42.27 | 0.78x | yes | EPS $1.31 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $4.96 | 6.62x | yes | BV $23.40 × (ROIC 1.7% / WACC 8.2%) |
| P/Sales Sector | Relative | $52.28 | 0.63x | yes | Revenue $9.03B × sector P/S 3.0x |
| PEG Fair Value | Relative | $49.13 | 0.67x | yes | EPS $1.31 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $14.16 | 2.32x | yes | EPS $1.31 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (dilution) | 1.4% |
Custody and consolidated-fund balance sheet: deposits, client cash, and fund-level debt are not corporate leverage, and operating cash flow follows client flows. Net-debt, coverage, and cash-burn lenses are suppressed as misleading; share-count CAGR is kept. The fee-earnings read above is the valuation basis.
Bullet Takeaways
- Franklin Resources manages about $1.68 trillion across mutual funds, ETFs, and alternatives, and its most recent quarter showed a franchise pulling in two directions: $21 billion of long-term net inflows excluding Western Asset, against $4.1 billion of continued outflows at the Western Asset subsidiary.
- The dividend is the anchor of the investment case, with a payout near $1.36 a share against a roughly $33 price (June 27, 2026), supported by capital-light fee economics and a steady buyback-and-dividend habit.
- The defining overhang is Western Asset, which remains under parallel SEC and DOJ investigation and continues to bleed assets; the pace of those outflows is the single variable most likely to move the stock.
Bull Case
Capital return is where the Franklin case is strongest, and it tells you how management reads its own business. The firm pays a dividend near $1.36 a share, a yield above 4% at today's price, and has a long record of steady dividend growth and opportunistic buybacks. A capital-light fee business that throws off cash and returns most of it is, in effect, paying you to wait while the franchise repositions. The 10-K describes the revenue engine plainly: Franklin earns revenue primarily from providing investment management and related services, with fund administration, distribution, and shareholder servicing layered on top. That is recurring, asset-based revenue that compounds with markets even when net flows are soft.
The mix shift underneath the headline is genuinely encouraging. Excluding Western Asset, the firm posted $21 billion of long-term net inflows in the quarter, and the growth is concentrated in the high-value, high-growth corners of the industry: ETF assets reached $61.6 billion, up 67% year over year, alternatives stood at $283 billion with $14.3 billion freshly fundraised, and multi-asset added $9.5 billion of positive flows. These are precisely the categories where fees hold up and assets are sticky, the opposite of the commoditizing core that pressures traditional managers. Franklin has spent years and several acquisitions building these capabilities, and they are now scaling.
The profitability turn supports the bull thesis. Adjusted operating income rose 25.8% year over year to $475 million, with adjusted diluted EPS of $0.71. That is operating leverage showing through as the higher-fee businesses grow into a cost base built for scale. The reframe is that Franklin is no longer just a legacy active-fund house in slow decline; it is a diversified manager whose growth engines, ETFs and alternatives, are finally large enough to matter, while the dividend pays holders through the transition.
Bear Case
The moat that built Franklin, brand-name active management with sticky retail distribution, is the one being chipped away, and the data shows exactly where. The core active business faces the same structural fee compression that has hollowed out the entire traditional-management industry: passive products and ETFs keep taking share, and the fees the legacy funds command keep grinding lower. The 10-K is candid that the firm competes in a highly competitive global environment on business reputation, investment performance, product mix, and that fees are routinely benchmarked against applicable industry standards, which is the polite way of saying the market sets the price and it keeps falling. Franklin's answer, buying its way into ETFs and alternatives, is the right strategy, but it is a defensive scramble against erosion in the core, not a position of strength.
Western Asset is the acute version of the same wound. The subsidiary shed $4.1 billion in long-term net outflows in the quarter, and the 10-K confirms that Western Asset remains the subject of parallel investigations by the SEC and the DOJ. A fixed-income manager under regulatory cloud loses assets the way a leaking boat loses water: steadily, predictably, and faster when sentiment turns. Until those investigations resolve, the outflows are likely to continue, and they directly offset the inflows the rest of the firm works hard to generate. The franchise is running up an escalator that Western Asset keeps reversing.
What the price requires makes the erosion matter. At about 20 times earnings, the level implies fee earnings grow roughly 14% a year, a healthy pace for a business whose return on equity is currently in the mid-single digits and whose largest fixed-income subsidiary is shrinking. Only the relative-multiple and growth-DCF methods reach today's price; the asset-based and earnings-power lenses both read it as expensive, the earnings-power read at roughly twice the static economics. The bear is that the price already credits the ETF-and-alternatives growth story while underweighting the drag from the eroding active core and the unresolved Western Asset situation. If the growth engines cannot outrun the legacy outflows, the implied 14% is the assumption that breaks.
Valuation
Franklin is a fee franchise, so the right lens is what its fee earnings throw off, not its book value, and the price reads off earnings. At about 20 times earnings, a 4.9% earnings yield, the price implies the firm grows fee earnings roughly 14% a year. That is within the firm's own record in good stretches, but it sits against a backdrop of mid-single-digit return on equity and a large fixed-income subsidiary in outflow, so the assumed pace leans on the growth engines doing the heavy lifting.
The methods split cleanly. The relative-multiple and growth-DCF families reach today's price, while the asset-based and earnings-power lenses say expensive, with the earnings-power read at about twice the static economics. For a fee business, the asset lens understates value because the franchise lives in the fee annuity, not the balance sheet, so the more telling comparison is to peer asset managers on a price-to-earnings basis, where Franklin trades at a discount to the highest-quality names and a premium to the most challenged. The price is paying for the mix shift toward ETFs and alternatives to keep lifting blended fee economics.
The balance sheet lens here is capital-return capacity, not leverage, since the deposits, client cash, and consolidated-fund balances that dominate a manager's balance sheet are not corporate debt. The relevant figure is the dividend plus buyback against earnings: Franklin's roughly $1.36 dividend and steady repurchases are well covered by fee earnings, which is what makes the yield durable. The downside boundary is the franchise's ability to keep returning capital while it repositions, and on that measure the cash generation is the floor. A buyer at this price is underwriting that the ETF and alternatives growth outpaces the legacy and Western Asset outflows fast enough to validate the multiple.
Catalysts
Franklin's second fiscal quarter showed the franchise's split personality. Total assets under management were $1,682.1 billion at March 31, 2026, with $16.9 billion of long-term net inflows for the quarter, a figure held back by $4.1 billion of continued outflows at Western Asset Management. Excluding Western Asset, long-term net inflows were $21 billion. The growth concentrated in the right places: ETF assets reached $61.6 billion, up 67% year over year with $4.5 billion of net inflows, alternatives drew $14.3 billion of fundraising, and multi-asset added $9.5 billion.
Profitability moved the right way. Adjusted operating income rose 25.8% year over year to $475 million, and adjusted diluted EPS was $0.71 for the quarter. The improvement reflects operating leverage as the higher-fee businesses scale, even as the equity and Western Asset fixed-income lines lost assets.
The overhang to watch is Western Asset, which remains under parallel SEC and DOJ investigation and continues to drive outflows that offset the rest of the firm's gains. The pace of those redemptions, any resolution of the investigations, and the continued momentum in ETFs and alternatives are the developments most likely to move the stock between now and the next print. The trajectory of net flows excluding Western Asset is the cleanest read on whether the underlying franchise is winning.
Peer Cohorts (Per Segment, With Filing Citations)
Franklin Resources (consolidated) (reported)
- TROW (PRICE T ROWE GROUP INC)
- (no filing in the citation store)
- IVZ (Invesco Ltd.)
- (no filing in the citation store)
- AMG (AFFILIATED MANAGERS GROUP, INC.)
- (no filing in the citation store)
- FHI (Federated Hermes, Inc.)
- (no filing in the citation store)
- AMP (AMERIPRISE FINANCIAL INC)
- (no filing in the citation store)
- SEIC (SEI INVESTMENTS COMPANY)
- (no filing in the citation store)
- SF (STIFEL FINANCIAL CORP)
- (no filing in the citation store)
- RJF (RAYMOND JAMES FINANCIAL INC)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Franklin Q2 FY2026 results · Franklin Q2 FY2026 earnings call