Franklin Gears Up to Report Q2 Earnings: What's in the Cards?

Franklin Resources Inc. BEN is scheduled to report second-quarter fiscal 2025 results (ended March 31) on May 2, before market open. BEN’s quarterly earnings and revenues are anticipated to have declined from the year-ago reported levels.

In the last reported quarter, Franklin’s earnings topped the Zacks Consensus Estimate, driven by a rise in revenues. However, a decline in the assets under management (AUM) balance and rising expenses were spoilsports.

BEN’s earnings beat the consensus estimate in two of the trailing four quarters and missed twice, the average earnings surprise being 3.29%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Franklin Resources, Inc. Price and EPS Surprise

Franklin Resources, Inc. price-eps-surprise | Franklin Resources, Inc. Quote

Franklin’s Q2 Earnings & Sales Estimates

The Zacks Consensus Estimate for BEN’s earnings of 47 cents has been unchanged over the past seven days. The figure indicates a decline of 16.1% from the year-ago quarter.

The consensus estimate for sales is pegged at $1.98 billion, suggesting a year-over-year decline of 8.1%.

Key Factors & Estimates for BEN in Q2

In the January-March quarter, the S&P 500 Index fell 2.7%, indicating a choppy market performance. The fixed-income market saw positive flow trends, with solid returns across funds. However, equity markets lagged the fixed-income performance. As a result, asset managers’ performances for the March-end quarter are likely to have benefited from strong fixed-income returns. However, weaker equity markets are expected to have partially offset these gains.

Per the monthly metrics data published by Franklin, its preliminary total AUM as of March 31, 2025, was $1.53 trillion compared with $1.57 trillion reported as of Feb. 28, 2025. The March-end AUM reflected the negative impacts of markets and long-term net outflows of $4 billion. The Zacks Consensus Estimate for fiscal second-quarter AUM is pegged at $1.53 trillion, indicating a decline of 3.2% from the prior quarter’s actual. Our estimate for the metric is pegged at $1.51 trillion.

The Zacks Consensus Estimate for investment management fee is pegged at $1.66 billion, indicating a sequential decline of 13.8%. Our estimate for the same is pegged at $1.56 billion.

The consensus estimate for sales and distribution fees of $339.9 million indicates a 9.5% fall from the prior quarter’s reported figure. We estimate the metric to be $328 million.

The consensus estimate for shareholder servicing fees of $61.9 million suggests a 2.5% decline from the prior quarter’s actual.  The Zacks Consensus Estimate for other revenues is pegged at $11.9 million, calling for a sequential fall of 10.5%. Our estimate for shareholder servicing fees and other revenues is pegged at $58.5 million and $11 million, respectively.

What Our Model Predicts for BEN

Per our proven model, the chances of BEN beating estimates this time are low. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you can see below.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: Franklin has an Earnings ESP of -0.71%.

Zacks Rank: BEN currently has a Zacks Rank of 5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of BEN’s Peers

Invesco’s IVZ first-quarter 2025 adjusted earnings of 44 cents per share surpassed the Zacks Consensus Estimate of 39 cents. Moreover, the bottom line jumped 33.3% from the prior-year quarter.

IVZ’s results primarily gained from higher adjusted net revenues. An increase in the AUM balance due to decent inflows was another positive. However, higher adjusted operating expenses were worrisome.

SEI Investments Co.’s SEIC first-quarter 2025 earnings per share of $1.17 beat the Zacks Consensus Estimate of $1.12. Moreover, the bottom line reflected a rise of 18.2% from the prior-year quarter.

SEIC's results were aided by higher revenues and a rise in assets under management. However, higher expenses acted as spoilsports.

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This article originally published on Zacks Investment Research (zacks.com).

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