- Wondering if Franklin Resources at around US$23.78 is offering value or just average pricing right now? This review walks through what the current numbers might be telling you about the stock.
- The share price has seen a 0.7% gain over the last 7 days, sits roughly flat year to date with a 0.1% decline, and has a 50.9% return over the past year. The last 30 days and 3 to 5 year returns have been much more muted at 9.4% declines and low single digit gains.
- Recent coverage has focused on Franklin Resources in the context of broader asset management trends and the role of diversified financials in investor portfolios. This helps frame how sentiment can shift around firms like this even without major stock specific headlines. This mix of company focus and sector wide commentary often feeds into how investors weigh near term risks against longer term potential.
- Simply Wall St's valuation framework currently gives Franklin Resources a 4 out of 6 valuation score. This suggests several metrics point to undervaluation while others are more balanced. The sections ahead will compare different ways to think about that pricing before finishing with an even deeper way to look at what fair value could mean for you.
Approach 1: Franklin Resources Excess Returns Analysis
The Excess Returns model looks at how much profit a company is expected to earn above the return that equity investors typically require. Instead of focusing on cash flows, it starts with the value of the equity on the balance sheet and estimates how efficiently that equity is used over time.
For Franklin Resources, the model uses a Book Value of $23.34 per share and a Stable EPS of $2.38 per share, based on weighted future Return on Equity estimates from 4 analysts. The Average Return on Equity is 10.02%, while the Cost of Equity is $1.98 per share. That leads to an Excess Return of $0.40 per share, which reflects the profit expected above the required return. The Stable Book Value is $23.78 per share, based on the median Book Value from the past 5 years.
Feeding these inputs into the Excess Returns framework gives an estimated intrinsic value of about $31.99 per share. Against a current share price around $23.78, this implies the stock screens as 25.7% undervalued on this approach.
Result: UNDERVALUED
Our Excess Returns analysis suggests Franklin Resources is undervalued by 25.7%. Track this in your watchlist or portfolio, or discover 61 more high quality undervalued stocks.
Approach 2: Franklin Resources Price vs Earnings
The price to earnings, or P/E, ratio is a common way to value profitable companies because it links what you pay directly to the earnings the business generates today. Investors usually accept a higher P/E when they expect stronger growth or see lower risk, and a lower P/E when growth expectations are modest or risk feels higher.
Franklin Resources currently trades on a P/E of 22.0x. That sits below the broader Capital Markets industry average P/E of about 36.8x and also below the peer group average of 28.7x. Simply Wall St also calculates a proprietary “Fair Ratio” of 15.4x, which reflects the P/E that might be expected given factors such as Franklin Resources’ earnings profile, industry, profit margins, size and risk characteristics.
This Fair Ratio can be more tailored than a simple comparison with peers or the industry, because it attempts to line up the P/E with company specific fundamentals rather than just where the group is trading. Comparing the current 22.0x P/E with the 15.4x Fair Ratio suggests the shares are pricing in more than that model would indicate.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Franklin Resources Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach a clear story about Franklin Resources to the numbers by linking your view on its future revenue, earnings and margins to a financial forecast and a fair value, then comparing that fair value with today’s price. Because Narratives on the Community page are updated when new news or earnings arrive, you can see in real time how a more optimistic view, such as a fair value around US$35.05, and a more cautious view, such as a fair value around US$22.00, reflect very different beliefs about the same company. This can help you decide which story fits your own expectations before acting.
For Franklin Resources, however, we will make it really easy for you with previews of two leading Franklin Resources Narratives:
🐂 Franklin Resources Bull Case
Fair value in this bullish narrative is set at about US$27.36 per share.
Against the recent price around US$23.78, that is roughly 13.2% below this narrative fair value.
The revenue line in this view is modelled as a 68.6% decline over the forecast period.
- Analysts see earnings resilience coming from expansion in global markets, private assets and digital technology, with a focus on operational efficiency.
- The narrative leans on acquisitions, retirement product initiatives and alternatives exposure to support earnings, while flagging fee pressure, outflows and integration risk.
- Consensus targets cluster around US$27.36, with a range from US$22.00 to US$36.00. The onus is on you to test whether the earnings, margin and P/E assumptions feel realistic.
🐻 Franklin Resources Bear Case
Fair value in this bearish narrative is set at about US$22.00 per share.
With the recent price around US$23.78, that sits roughly 8.1% above this narrative fair value.
The revenue line in this view is modelled as a 1.7% decline over the forecast period.
- This narrative leans into the pressure from passive products, fee compression and fintech competitors that could weigh on assets under management and fee income.
- It also highlights cost intensity, regulatory demands and questions about the payoff from digital projects as constraints on margins and earnings.
- The fair value anchor is a US$19.00 to US$22.00 bear range, built around lower P/E assumptions and cautious views on how far profitability can stretch.
If you want to see how other investors are weighing up these trade offs and how the story shifts as new data comes in, it is worth looking at the full set of narratives and valuation work that sit behind them. From there, you can decide which assumptions come closest to your own view.
To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Franklin Resources on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.
Do you think there's more to the story for Franklin Resources? Head over to our Community to see what others are saying!
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.
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