Yahoo Finance Earnings Miss: Franklin Resources, Inc. Missed EPS By 51% And Analysts Are Revising Their Forecasts
Franklin Resources, Inc. (NYSE:BEN) shareholders are probably feeling a little disappointed, since its shares fell 9.8% to US$22.84 in the week after its latest second-quarter results. Results overall were not great, with earnings of US$0.23 per share falling drastically short of analyst expectations. Meanwhile revenues hit US$2.2b and were slightly better than forecasts. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Franklin Resources
After the latest results, the six analysts covering Franklin Resources are now predicting revenues of US$8.34b in 2024. If met, this would reflect a reasonable 3.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to grow 16% to US$1.90. In the lead-up to this report, the analysts had been modelling revenues of US$8.32b and earnings per share (EPS) of US$2.06 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
The average price target fell 6.4% to US$25.94, with reduced earnings forecasts clearly tied to a lower valuation estimate. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Franklin Resources at US$29.00 per share, while the most bearish prices it at US$23.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Franklin Resources' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.1% growth on an annualised basis. This is compared to a historical growth rate of 8.9% over the past five years. Compare this to the 272 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.9% per year. So it's pretty clear that, while Franklin Resources' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Franklin Resources' future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Franklin Resources going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Franklin Resources that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
