Chances are you didn’t notice that asset managers spent the majority of last year trading below the broader market.
Truth be told, it’s not a very exciting industry. It rarely makes the headlines. But that’s where true value may rest its head.
Fee pressure, passive flows, and doubts about older franchises were the go-to reasons for the underperformance. Even the firms that still produced strong cash were priced as if their best days were over.
Franklin Resources (NYSE: BEN), known to clients as Franklin Templeton, has been one of the more resilient names in the sector. It manages $1.7 trillion in global assets across every asset class you know well (and those you don’t), serving retail, institutional, and high-net-worth clients internationally.
And it’s doing a decent job of it.
In the quarter ending in March, Franklin posted $2.3 billion in operating revenue, up 9% from $2.1 billion a year earlier. Net income nearly doubled from $151.4 million in the same quarter a year ago to $268.2 million.
Long-term net inflows reached $16.9 billion. The year before, the firm had $26.2 billion in net outflows. That’s a stark shift.
Franklin Resources returned $234.6 million to shareholders during the quarter. That total included $177.5 million in dividends and $57.1 million in share buybacks.
Cash and investments stood at $6.2 billion against $1.8 billion in long-term debt. That debt figure puts the company’s debt-to-capital ratio – the share of funding that comes from debt versus equity – at roughly 12%.
The stock spent most of 2024 and early 2025 stuck in the high teens, going nowhere. Then it climbed through the back half of 2025, dipped into the low $20s in November, and has since pushed back up near $29.
The market has clearly started to pay attention. The question is whether it’s paying a fair price for the stock.
Investors are paying about half as much for each dollar of Franklin’s net asset value as they do for the average company. Franklin’s enterprise value-to-net asset value (EV/NAV) ratio sits at 1.93, against a broad market average of 3.9 – a gap of about 51%.
Not only does each dollar of Franklin’s assets cost less than the average dollar in the market; it’s also producing more cash. Over the past four quarters, the firm’s free cash flow-to-net asset value (FCF/NAV) ratio reached 1.57%, roughly 29% ahead of the broad market average of 1.22%.
That combination – stronger cash output paired with a lower multiple – is what lets buybacks and dividends compound value without the share price needing to rise.
Franklin’s quarterly free cash flow has grown over the prior quarter about 64% of the time across the past three years, which is above the broad market average of 46%. Growth in two of every three quarters isn’t luck – it’s what a stable fee base, disciplined expenses, and recurring revenue produce.
For someone buying at today’s price, that steadiness narrows the range of cash outcomes the discount is built around.
So one question remains: Is the discount on Franklin about Franklin… or about the sector it sits in?
The cash generation rate sits above the market average. The consistency of that generation sits even further above the average. The numbers describe a firm that’s priced for problems its record hasn’t shown.
The market is pricing Franklin Resources as a business in slow decline. The numbers describe something steadier.
The Value Meter rates Franklin Resources as “Slightly Undervalued.”
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