- Wondering if Franklin Resources at around US$31.83 is still offering value, or if the easy money has already been made.
- The stock has returned 2.5% over the past week, 19.5% over the past month, 33.7% year to date and 50.4% over the last year, which naturally raises questions about how much of the story is already in the price.
- These moves come as Franklin Resources continues to attract attention as a long established asset manager, with investors weighing its current position in global markets against broader sector trends. Recent coverage has focused on how its business model responds to shifts in investor preferences and industry competition, giving more context to the share price action.
- On Simply Wall St’s valuation checks, Franklin Resources scores a 3 out of 6. The rest of this article will walk through what that means across different valuation methods, before closing with a framework that can help you think about value in an even more complete way.
Approach 1: Franklin Resources Excess Returns Analysis
The Excess Returns model looks at how effectively a company turns shareholders’ equity into profits above the return investors expect. In other words, it focuses on what Franklin Resources earns on its equity after covering its cost of equity.
For Franklin Resources, book value is $23.33 per share and stable earnings per share are estimated at $2.48, based on weighted future Return on Equity estimates from 4 analysts. The average Return on Equity is 10.44%, while the cost of equity is $1.96 per share. That leaves an excess return of $0.53 per share, meaning the model sees Franklin Resources generating value above the required shareholder return, using a stable book value of $23.78 per share, based on the median of the past 5 years.
Putting these inputs together, the Excess Returns model estimates an intrinsic value of about $35.00 per share. Against the current share price of around $31.83, this implies roughly a 9.1% discount, which is small enough to sit in the “roughly fair” zone rather than clearly cheap or expensive.
Result: ABOUT RIGHT
Franklin Resources is fairly valued according to our Excess Returns, but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.
Approach 2: Franklin Resources Price vs Earnings
P/E is a common way to value profitable companies because it links what you pay per share to what the company is currently earning per share. It gives you a quick sense of how many dollars investors are willing to pay for one dollar of earnings.
What counts as a “normal” or “fair” P/E depends on what the market expects for future growth and how risky those earnings are. Higher expected growth or lower perceived risk often goes with a higher P/E, while slower growth or higher risk tends to come with a lower P/E.
Franklin Resources currently trades on a P/E of 24.41x, compared with an industry average for Capital Markets companies of about 40.63x and a peer group average of 30.76x. Simply Wall St’s Fair Ratio for Franklin Resources is 16.85x. The Fair Ratio is a proprietary metric that estimates what P/E could make sense given the company’s earnings growth profile, industry, profit margins, market cap and risk characteristics. Because it is tailored to the company’s fundamentals rather than broad group averages, it can give a more targeted view than simple peer or industry comparisons. On this basis, the current 24.41x P/E sits above the Fair Ratio of 16.85x.
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. Meet Narratives, a simple tool on Simply Wall St’s Community page that lets you attach a clear story to your numbers by linking what you believe about Franklin Resources’ future revenue, earnings and margins to a financial forecast and then to a Fair Value that you can compare with the current share price.
On the platform, Narratives are already doing this for you using different analyst viewpoints. One Franklin Resources Narrative might lean cautious, with a Fair Value around US$21.00. Another is more optimistic at about US$35.05, and a middle ground view sits closer to US$27.36. All of these reflect different assumptions about future revenue paths, profit margins, discount rates and P/E multiples.
As new earnings, news or estimate changes come through, these Narratives refresh automatically. This means you can quickly see whether your preferred Franklin Resources story still lines up with the current price or if the gap between Fair Value and market price has moved enough to warrant rethinking your stance.
For Franklin Resources however, we’ll make it really easy for you with previews of two leading Franklin Resources Narratives:
First, look at the bullish take, which assumes the current price leaves some room for upside if certain business drivers play out as expected.
🐂 Franklin Resources Bull Case
Fair value: about US$35.05 per share.
Current price vs this Fair Value: trading at roughly a 9.2% discount to that narrative.
Revenue outlook in this view: revenue growth of about 113.50%.
- Sees Franklin Resources benefiting from strong institutional inflows, product expansion and broad global reach that together support higher assets under management and new fee streams.
- Expects early moves in alternatives, blockchain and retirement solutions to support higher margins and earnings, alongside ongoing share buybacks.
- Recognises risks from fee pressure, active to passive shifts, competition, integration costs and regulation, and anchors its Fair Value around US$35.05 using discounted future earnings and P/E assumptions.
On the other side is a bearish narrative that argues the current price already bakes in too much optimism about future earnings power.
🐻 Franklin Resources Bear Case
Fair value: about US$21.00 per share.
Current price vs this Fair Value: trading at roughly 51.6% above that narrative.
Revenue outlook in this view: revenue is expected to decline by about 1.72% a year, even though earnings are still modeled to grow.
- Focuses on structural shifts toward passive products, fee pressure and tech driven competitors that could weigh on assets under management, fee income and long term earnings.
- Highlights cost intensity, scale disadvantages and uncertainty around digital and tokenization projects, suggesting limited room for sustained margin expansion.
- Arrives at a Fair Value of about US$21.00 per share, implying meaningful downside from the current price if revenues soften and the P/E multiple settles closer to bearish analyst assumptions.
Taken together, these Narratives show how the same stock can look either slightly undervalued or materially overvalued depending on what you believe about future revenue paths, margins and the P/E investors will be willing to pay.
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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