Franklin Resources (NYSE: BEN) and State Street Corporation (NYSE:STT) are both large-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, valuation, profitability, dividends and institutional ownership.
This is a summary of current ratings for Franklin Resources and State Street Corporation, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|State Street Corporation||2||9||3||1||2.20|
Franklin Resources currently has a consensus price target of $42.22, suggesting a potential downside of 1.23%. State Street Corporation has a consensus price target of $90.29, suggesting a potential downside of 1.95%. Given Franklin Resources’ higher possible upside, equities research analysts clearly believe Franklin Resources is more favorable than State Street Corporation.
Franklin Resources pays an annual dividend of $0.80 per share and has a dividend yield of 1.9%. State Street Corporation pays an annual dividend of $1.52 per share and has a dividend yield of 1.7%. Franklin Resources pays out 26.1% of its earnings in the form of a dividend. State Street Corporation pays out 28.1% 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 35 consecutive years and State Street Corporation has increased its dividend for 6 consecutive years. Franklin Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk & Volatility
Franklin Resources has a beta of 1.73, indicating that its stock price is 73% more volatile than the S&P 500. Comparatively, State Street Corporation has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500.
Insider and Institutional Ownership
45.8% of Franklin Resources shares are owned by institutional investors. Comparatively, 88.6% of State Street Corporation shares are owned by institutional investors. 21.6% of Franklin Resources shares are owned by insiders. Comparatively, 0.6% of State Street Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
This table compares Franklin Resources and State Street Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|State Street Corporation||19.97%||12.49%||0.95%|
Earnings & Valuation
This table compares Franklin Resources and State Street Corporation’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Franklin Resources||$6.39 billion||3.73||$2.31 billion||$3.06||13.97|
|State Street Corporation||$10.63 billion||3.24||$2.02 billion||$5.40||17.05|
Franklin Resources has higher revenue, but lower earnings than State Street Corporation. Franklin Resources is trading at a lower price-to-earnings ratio than State Street Corporation, indicating that it is currently the more affordable of the two stocks.
Franklin Resources beats State Street Corporation on 11 of the 18 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 State Street Corporation
State Street Corporation is a financial holding company. The Company operates through two lines of business: Investment Servicing and Investment Management. The Company, through its subsidiary, State Street Bank and Trust Company (State Street Bank), provides a range of financial products and services to institutional investors across the world. Investment servicing line of business performs functions, such as providing institutional investors with clearing, settlement and payment services. The Company operates investment management line of business through State Street Global Advisors (SSGA). SSGA provides a range of investment management, investment research and investment advisory services to corporations, public funds and other investors. Its clients include mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments and investment managers.
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