Analyzing Franklin Resources (BEN) and Bank Of New York Mellon (BK)
Franklin Resources (NYSE: BEN) and Bank Of New York Mellon (NYSE:BK) are both large-cap financials companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, risk, dividends, institutional ownership and profitability.
Franklin Resources pays an annual dividend of $0.92 per share and has a dividend yield of 2.1%. Bank Of New York Mellon pays an annual dividend of $0.96 per share and has a dividend yield of 1.7%. Franklin Resources pays out 30.6% of its earnings in the form of a dividend. Bank Of New York Mellon pays out 28.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Franklin Resources has increased its dividend for 36 consecutive years and Bank Of New York Mellon has increased its dividend for 5 consecutive years. Franklin Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Franklin Resources has a beta of 1.75, suggesting that its stock price is 75% more volatile than the S&P 500. Comparatively, Bank Of New York Mellon has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500.
This is a summary of current ratings and price targets for Franklin Resources and Bank Of New York Mellon, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Bank Of New York Mellon||2||8||5||0||2.20|
Franklin Resources currently has a consensus price target of $43.56, suggesting a potential downside of 0.83%. Bank Of New York Mellon has a consensus price target of $56.33, suggesting a potential upside of 2.31%. Given Bank Of New York Mellon’s stronger consensus rating and higher probable upside, analysts plainly believe Bank Of New York Mellon is more favorable than Franklin Resources.
Earnings and Valuation
This table compares Franklin Resources and Bank Of New York Mellon’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Franklin Resources||$6.39 billion||3.80||$1.70 billion||$3.01||14.59|
|Bank Of New York Mellon||$15.67 billion||3.60||$3.55 billion||$3.40||16.19|
Bank Of New York Mellon has higher revenue and earnings than Franklin Resources. Franklin Resources is trading at a lower price-to-earnings ratio than Bank Of New York Mellon, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
44.7% of Franklin Resources shares are held by institutional investors. Comparatively, 82.9% of Bank Of New York Mellon shares are held by institutional investors. 22.2% of Franklin Resources shares are held by company insiders. Comparatively, 3.6% of Bank Of New York Mellon shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This table compares Franklin Resources and Bank Of New York Mellon’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Bank Of New York Mellon||23.14%||10.51%||1.11%|
Bank Of New York Mellon beats Franklin Resources on 9 of the 17 factors compared between the two stocks.
About Franklin Resources
Franklin Resources, Inc. is a holding company. The Company, along with its subsidiaries, operates as Franklin Templeton Investments. It is a global investment management company that provides investment management and related services to retail, institutional and high net-worth clients in jurisdictions around the world. The Company offers its investment products and services under the Franklin, Templeton, Franklin Mutual Series, Franklin Bissett, Fiduciary Trust, Darby, Balanced Equity Management, K2 and LibertyShares brand names. Its products include investment funds and institutional, high net-worth and separately managed accounts (collectively, sponsored investment products (SIPs)). It offers various types of SIPs, such as the United States funds, cross-border funds, local/regional funds, and other managed accounts, alternative investment products and trusts. Its investment funds include the United States-registered funds, non-United States-registered funds and unregistered funds.
About Bank Of New York Mellon
The Bank of New York Mellon Corporation is an investments company. The Company operates businesses through two segments: Investment Management and Investment Services. The Company also has an Other segment, which includes the leasing portfolio, corporate treasury activities (including its investment securities portfolio), derivatives and other trading, corporate and bank-owned life insurance and renewable energy investments, and business exits. As of December 31, 2016, the Company had $29.9 trillion in assets under custody and/or administration and $1.6 trillion in assets under management. The Company’s Investment Management boutiques offer a range of actively managed equity, fixed income, alternative and liability-driven investments, along with passive products and cash management. The Company offers asset servicing, clearing services, issuer services and treasury services to its clients.
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