BEN
Franklin Resources, Inc.$26.92
Sell
Target $12.61
Report: Mar 13, 2026Financial Services • Asset Management • Cyclical OperatorSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$26.92-53.2%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$12.61
(53% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$28.32
52 Week Low$16.25
Avg. 3 Month Volume5.49M
Efficiency
LTM Gross Margin100.0%
LTM EBITDA Margin17.3%
LTM EBIT Margin11.0%
LTM Operating Margin7.5%
LTM ROA1.9%
LTM ROE5.1%
LTM ROIC3.1%
LTM ROCE3.0%
Capital Structure
Market Cap (MM)$12.3B
Enterprise Value (MM)$23.0B
Shares Outstanding520.76M
Total Debt (MM)$14.21B
Cash & Equivalents (MM)$3.48B
LTM Net Debt (MM)$10.72B
LTM Net Debt/EBITDA7.0x
Growth
TTM Rev. Growth1.2%
Last 3-Yr Rev. CAGR3.3%
Last 3-Yr EBITDA CAGR-6.8%
Last 3-Yr EPS CAGR-18.0%
Valuation
Street Target Price$23.50
LTM EV/Revenue2.6x
LTM EV/Gross Profit2.6x
LTM EV/EBIT23.7x
LTM EV/EBITDA15.1x
LTM P/E19.9x
LTM EV/FCF26.1x
LTM P/FCF13.9x
LTM P/TB0.6x
LTM P/B1.0x
Dividend Yield5.5%
Payout Ratio119.4%
Executive SummarySituation: Current price is $26.92 versus fair value $12.61 (-53.2% expected return), and valuation confidence is stable. Debate: Bull case depends on Western Asset Outflow Acceleration If outflows continue at the current pace ($68 billion recently), it will validate our view that the fixed-income franchise is structurally impaired, leading to further margin compression. Bear case centers on Prolonged Cyclical Downturn A 'lower-for-longer' environment in AUM growth combined with high fixed costs could lead to a breach of the 3.25x net leverage covenant, though management currently claims compliance. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
Management successfully realizes $200 million in cost savings and scales the alternatives business (Apera/Lexington) to higher-margin revenue streams. AI-driven distribution initiatives significantly reduce SG&A, allowing the firm to hit its 30% operating margin target by FY2027.
Bear Case
Western Asset outflows accelerate beyond the $68 billion already lost, and fee compression in core equity products offsets any gains from alternatives. High leverage (7.0x Net Debt/EBITDA) and recurring goodwill impairments ($200 million in FY2025) lead to a credit rating downgrade and forced dividend cut.
Key Catalysts
Near-Term (0-6 months)Impact: High
Western Asset Outflow Acceleration If outflows continue at the current pace ($68 billion recently), it will validate our view that the fixed...
Mid-Term (6-18 months)Impact: Critical
FY2026 Margin Target Miss Management has guided to high-20s margins by the end of FY2026. A failure to show significant progress toward this...
Long-Term (18+ months)Impact: Moderate
Franklin Resources is relevant now because the stock has rallied 15% in early 2026 despite poor earnings, creating a significant disconnect...
Primary Risks
Concern: High
Prolonged Cyclical Downturn A 'lower-for-longer' environment in AUM growth combined with high fixed costs could lead to a breach of the 3.25...
Concern: Medium
Fee Compression and Passive Migration The secular shift to low-fee products (ETFs/Canvas) could cannibalize higher-margin active fees faster...
Concern: Medium
Stewardship is adequate but hampered by family control and poor capital timing. The Governance Outcome Tree suggests: 1. Status Quo (Current...
Recent Activity
2025-05-02SEC Filing (8-K)
+7.04%Franklin Resources Inc. announces Q2 2025 financial results with net income of $151.4M
2025-04-03SEC Filing (SC 13D/A)
-7.62%Franklin Resources and affiliates report 39.4% ownership of Clarion Partners Real Estate Income Fund
2025-01-31SEC Filing (8-K)
+10.37%Franklin Resources, Inc. announces Q1 fiscal 2025 financial results
2024-12-18SEC Filing (SC 13D/A)
-5.62%Franklin Resources Inc. files Schedule 13D/A reporting 69.1% beneficial ownership of Franklin BSP Private Credit Fund
2024-08-21SEC Filing (8-K)
-12.56%Western Asset Management announces leadership transition with Michael Buchanan named CIO
Valuation Table
9.8/10Decision Grade
Scenario Range
$0
Bear
$10
Base
$17
Bull
$27