Franklin Resources (BEN): Assessing Valuation Following Launch of XRP ETF and Expansion Into Digital Assets

Franklin Resources has just launched the Franklin XRP ETF, giving investors a new way to gain exposure to XRP, one of the top blockchain-based payment assets. This expansion highlights the company’s growing focus on digital assets and evolving client needs.

See our latest analysis for Franklin Resources.

The launch of the Franklin XRP ETF comes just after management’s participation at the Bloomberg New Economy Forum. This keeps momentum strong following a year where the 1-year total shareholder return reached 5.4%. While the year-to-date share price return sits at 12.2% and recent weeks brought a 4.2% gain, longer-term returns have been solid. This shows resilience through volatility and suggests investors see renewed potential as Franklin broadens its offerings in digital assets.

If you’re interested in what else could be gaining traction in the market, now’s a great time to broaden your horizons and discover fast growing stocks with high insider ownership

With recent gains and the launch of its XRP ETF, the question now is whether Franklin Resources is undervalued relative to its growth prospects or if investors are already pricing in future digital asset momentum.

Most Popular Narrative: 8.6% Undervalued

Franklin Resources is trading at $22.59, which is below the most widely followed narrative’s estimate of fair value at $24.73 per share. The narrow gap between price and value makes the supporting assumptions and future outlook worth a closer look.

The company is actively expanding its presence in non-U.S. and emerging markets, now with $500 billion of AUM outside the US and new mandates in countries like Uzbekistan and Saudi Arabia. This positions Franklin Resources to benefit from the rising global wealth and the increasing allocation of institutional capital worldwide. This is likely to support future AUM growth and top-line revenue expansion.

Read the complete narrative.

Want to find out what Wall Street is banking on to support this valuation? The underlying forecasts involve ambitious global expansion and a big swing in future profits. Uncover the exact projections and the logic behind this price. There is more beneath the surface.

Result: Fair Value of $24.73 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, ongoing fee pressure and persistent client outflows could challenge Franklin Resources’ earnings momentum, which may put its positive long-term growth narrative to the test.

Find out about the key risks to this Franklin Resources narrative.

Another View: High Price Tag Versus Peers

Looking at how Franklin Resources is valued compared to similar companies, the current price-to-earnings ratio stands at 24.9x. This is noticeably higher than the average for industry peers at 18.2x, and it also tops the fair ratio of 17.6x the market might eventually move toward. Such a premium could suggest limited upside at today’s price if earnings do not accelerate. Is the market’s optimism getting ahead of itself?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Franklin Resources Narrative

If the current story does not quite align with your perspective, explore the numbers yourself and craft a new outlook in minutes. Do it your way

A great starting point for your Franklin Resources research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

Looking for More Smart Investment Opportunities?

Don’t settle for just one idea. These unique lists can help you uncover dynamic stocks you might have missed and keep your portfolio a step ahead.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com