Franklin Resources

Methodology

Franklin Resources' traditional asset management business faces structural headwinds from passive investing and fee compression, making earnings growth challenging. The company's acquisition of Legg Mason added scale but hasn't reversed industry-wide active management outflows. This calculation is less reliable given the secular shift toward index funds—normalized organic growth assumptions provide more realistic baselines than historical growth rates.

Methodology

Franklin Resources often shows attractive PEG ratios given low multiples, but this reflects market skepticism about active managers' ability to grow AUM and maintain fees against passive competition. The company's modest growth or declining assets under management justifies lower valuations than growing asset managers. A low PEG may be a value trap unless Franklin successfully pivots toward alternatives or specialized strategies that can compete with index funds.

Methodology

Franklin Resources maintains a substantial dividend yield that appeals to income investors despite growth challenges. The company's commitment to the dividend even during outflows and margin pressure signals management confidence, but sustainability depends on stemming AUM declines. PEGY is relevant for investors seeking yield from asset management, though dividend coverage and the trajectory of fee revenues should be carefully monitored.