Contrasting 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 better stock? We will compare the two companies based on the strength of their risk, dividends, institutional ownership, earnings, analyst recommendations, profitability and valuation.

Dividends

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 5 consecutive years and Bank Of New York Mellon has increased its dividend for 36 consecutive years.

Valuation & Earnings

This table compares Franklin Resources and Bank Of New York Mellon’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Franklin Resources $6.39 billion 3.74 $1.70 billion $3.01 14.38
Bank Of New York Mellon $15.67 billion 3.74 $3.55 billion $3.40 16.85

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.

Analyst Ratings

This is a summary of current ratings for Franklin Resources and Bank Of New York Mellon, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Franklin Resources 3 6 1 0 1.80
Bank Of New York Mellon 2 7 6 0 2.27

Franklin Resources currently has a consensus price target of $43.56, indicating a potential upside of 0.66%. Bank Of New York Mellon has a consensus price target of $56.33, indicating a potential downside of 1.69%. Given Franklin Resources’ higher probable upside, research analysts plainly believe Franklin Resources is more favorable than Bank Of New York Mellon.

Institutional and Insider Ownership

44.7% of Franklin Resources shares are owned by institutional investors. Comparatively, 82.9% of Bank Of New York Mellon shares are owned by institutional investors. 22.2% of Franklin Resources shares are owned by insiders. Comparatively, 3.6% of Bank Of New York Mellon shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Franklin Resources has a beta of 1.75, suggesting that its share 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 share price is 22% more volatile than the S&P 500.

Profitability

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
Franklin Resources 26.54% 13.48% 9.92%
Bank Of New York Mellon 23.14% 10.51% 1.11%

Summary

Bank Of New York Mellon beats Franklin Resources on 10 of the 17 factors compared between the two stocks.

Franklin Resources Company Profile

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.

Bank Of New York Mellon Company Profile

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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