Franklin Q1 Earnings & Revenues Surpass Estimates, AUM Declines Q/Q

For the quarter ended December 2024, Franklin Resources (BEN) reported revenue of $2.25 billion, up 13.1% over the same period last year. EPS came in at $0.59, compared to $0.65 in the year-ago quarter.

The reported revenue compares to the Zacks Consensus Estimate of $2.1 billion, representing a surprise of +7.43%. The company delivered an EPS surprise of +11.32%, with the consensus EPS estimate being $0.53.

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.

As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.

Here is how Franklin Resources performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

• Assets Under Management - Fixed income: $469.5 billion versus the three-analyst average estimate of $500.35 billion.
• Assets Under Management - Multi-Asset: $174 billion versus $172.3 billion estimated by three analysts on average.
• Assets Under Management - Equity: $620 billion versus $612.45 billion estimated by three analysts on average.
• Assets Under Management - Alternative: $248.8 billion versus the three-analyst average estimate of $250.28 billion.
• Total Net Flows: $-50 billion versus $-35.6 billion estimated by three analysts on average.
• Assets Under Management - Cash Management: $63.4 billion compared to the $60.8 billion average estimate based on three analysts.
• Assets Under Management - Total: $1,634.5 billion versus $1,596.18 billion estimated by three analysts on average.
• EOP Net Flows - Multi-Asset: $3.4 billion versus the two-analyst average estimate of $4.37 billion.
• Operating Revenues- Other: $13.30 million compared to the $11.59 million average estimate based on four analysts. The reported number represents a change of +33% year over year.
• Operating Revenues- Investment management fees: $1.80 billion versus the four-analyst average estimate of $1.64 billion. The reported number represents a year-over-year change of +8.9%.
• Operating Revenues- Shareholder servicing fees: $63.50 million versus $59.29 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +95.4% change.
• Operating Revenues- Sales and distribution fees: $375.50 million versus the three-analyst average estimate of $357.89 million. The reported number represents a year-over-year change of +26.7%.

View all Key Company Metrics for Franklin Resources here>>>

Shares of Franklin Resources have returned +0.1% over the past month versus the Zacks S&P 500 composite's +2.9% change. The stock currently has a Zacks Rank #5 (Strong Sell), indicating that it could underperform the broader market in the near term.

Zacks Investment Research

Financial stocks were edging lower in early trading Friday with the Financial Select Sector SPDR Fund recently falling by 0.05%.

The Direxion Daily Financial Bull 3X Shares was 0.1% lower and its bearish counterpart Direxion Daily Financial Bear 3X Shares was up 0.3%.

Franklin Resources reported lower fiscal Q1 adjusted earnings and higher operating revenue. The company's shares were up 0.2%.

Apollo Global Management said it will invest $500 million in subordinated notes issued by Aldar Properties. The company's shares rose 0.9%.

Piper Sandler shares were up 6.5% after it reported higher Q4 adjusted earnings and net revenue.

Federated Hermes, Inc.’s FHI fourth-quarter 2024 adjusted earnings per share of $1.04 topped the Zacks Consensus Estimate of 96 cents. The bottom line increased 8% from the year-ago quarter.

Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.

An increase in net administrative service fees is a major driving factor. The company’s total managed assets touched a record level. An increase in revenues was an added advantage.

Net income (GAAP basis) of $84.7 million rose 3% from the year-ago quarter.

In 2024, earnings of $3.23 per share topped the consensus estimate of $3.10. The metric rose from $3.40 in 2023. Net income was $268.3 million in 2024, which fell 10% from the prior year.

FHI’s Revenues & Operating Expenses

Total revenues increased 8% year over year to $424.7 million. The top line surpassed the Zacks Consensus Estimate by 1.2%.

For 2024, operating revenue was $1.63 billion, which met the Zacks Consensus Estimate. The top line rose 1% year over year.

Quarterly net investment advisory fees rose 9% year over year to $288.3 million. Our estimate for the metric was $280.9 million.

Net other service fees rose 2% year over year to $36.6 million and net administrative service fees rose 10% to $99.7 million. Our estimate for the other service fees and administrative service fees was pegged at $38.2 million and $99 million, respectively.

Total operating expenses increased 9% year over year to $314.3 million. Our expectation for the metric was $327.5 million.

Federated Hermes recorded a net non-operating income of $1.9 million compared with $14.7 million in the prior-year quarter.

Federated Hermes’ Balance Sheet Position

As of Dec. 31, 2024, cash and other investments and total long-term debt were $641 million and $348.1 million compared with $565 million and $348 million, respectively, as of Sept. 30, 2024.

FHI’s Asset Position

As of Dec. 31, 2024, total managed assets were at a record level of $829.6 billion, up 9.5% year over year. Our estimate for the metric was $815.8 billion.

FHI reported money-market assets of $630.3 billion, up 12.6% year over year. Fixed-income assets increased 3.3% to $98 billion. Our expectations for money-market and fixed-income assets were $606.3 billion and $101.1 billion, respectively.

Equity assets of $79.4 billion increased 1.1% from the prior-year quarter. Alternative/private market assets fell 8.2% to $18.9 billion. Our estimate for equity assets and alternative/private market assets was $83.9 billion and $21.4 billion, respectively.

Average managed assets totaled $805.4 billion, up 10.5% year over year. Our estimate was $804.7 billion.

Federated Hermes’ Capital Distribution Update

The company declared a quarterly cash dividend of 31 cents per share, which will be paid out on Feb. 14, 2025, to shareholders of record as of Feb. 7.

The company repurchased 552,533 shares of its class B common stock for $22.1 million in the reported quarter.

Our Viewpoint on FHI

Federated Hermes displays substantial growth potential, supported by its diverse asset and product mix, and a solid liquidity position. Though uncertain markets pose a threat, a solid asset under management balance will likely aid its financials.

Federated Hermes, Inc. Price, Consensus and EPS Surprise

Federated Hermes, Inc. price-consensus-eps-surprise-chart | Federated Hermes, Inc. Quote

Currently, FHI carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performances of Other Asset Managers

Invesco’s IVZ fourth-quarter 2024 adjusted earnings of 52 cents per share surpassed the Zacks Consensus Estimate of 49 cents. Moreover, the bottom line increased 10.6% from the prior-year quarter.

The results primarily gained from a decline in adjusted expenses and higher adjusted net revenues. An increase in the AUM balance on decent inflows was a positive for IVZ.

BlackRock’s BLK fourth-quarter 2024 adjusted earnings of $11.93 per share surpassed the Zacks Consensus Estimate of $11.44. The figure reflects a rise of 23.5% from the year-ago quarter.

BLK’s results benefited from a rise in revenues. AUM witnessed robust growth and touched the $11.55-trillion mark, driven by net inflows, partially offset by market depreciation and negative forex impacts. However, higher expenses and lower non-operating income acted as headwinds.

Zacks Investment Research

Financial stocks were edging higher in early trading Friday with the Financial Select Sector SPDR Fund (XLF) recently advancing by 0.2%.

The Direxion Daily Financial Bull 3X Shares (FAS) was 0.7% higher and its bearish counterpart Direxion Daily Financial Bear 3X Shares (FAZ) was down 0.7%.

Franklin Resources reported lower fiscal Q1 adjusted earnings and higher operating revenue. The company's shares were up 0.9%.