Franklin Resources Stock Rises – A Closer Look at the Upward Momentum

We have noted Franklin Resources's positive performance during today's afternoon trading session, during which it logged a 4.0% outperformance of the S&P 500. At its current price of $28.17, the company is now trading in range of its average target price of $27.75, which calls into question its ability to keep moving higher. Analysts have given the Asset Management stock target prices ranging from $24.0 to $30.0 dollars per share, with an average rating of hold.

The market sentiment on the stock is decidedly optimistic, since Franklin Resources has a short interest of only 4.2%. This is the percentage of the share float that is being shorted. Each short position represents an investor's expectation that the price of the stock will decrease in the future.

Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.

We can make inferences about the market sentiment surrounding Franklin Resources by analyzing its rate of institutional ownership. If institutions such as hedge funds and pension funds are the primary shareholders of a corporation, it most likely means that its shares are a good investment according to those institutions' analysts.

At 49.3%, the rate of institutional ownership is average, indicating that a sufficient number of institutions have concluded that it is a stable investment. Beware, however, that the rate of institutional ownership could also indicate an ongoing proxy battle or takeover attempt -- so you should also periodically check the news about a stock whose institutional ownership you are tracking.

Overall, there is mixed market sentiment on Franklin Resources because its an analyst consensus of little upside potential, a hold rating, an average amount of shares sold short, and only a small number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.

Buffett was one of the fist investors to focus on free cash flow as a yardstick for a company's health. Here are BEN's recent cash flows:

Date Reported Cash Flow from Operations ($ k) Capital expenditures ($ k) Free Cash Flow ($ k) YoY Growth (%)
2023 1,138,700 148,800 989,900 -46.96
2022 1,956,700 90,300 1,866,400 60.05
2021 1,245,400 79,300 1,166,100 19.04
2020 1,083,300 103,700 979,600 2714.94
2019 268,500 233,700 34,800 -98.36
2018 2,229,700 106,500 2,123,200
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.