Franklin Resources (NYSE:BEN) and State Street (NYSE:STT) are both large-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.
Risk & Volatility
Franklin Resources has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500. Comparatively, State Street has a beta of 1.6, suggesting that its stock price is 60% more volatile than the S&P 500.
Earnings and Valuation
This table compares Franklin Resources and State Street's gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Franklin Resources | $5.57 billion | 2.47 | $798.90 million | $2.61 | 10.41 |
State Street | $13.13 billion | 2.04 | $2.24 billion | $6.17 | 12.33 |
State Street has higher revenue and earnings than Franklin Resources. Franklin Resources is trading at a lower price-to-earnings ratio than State Street, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
45.7% of Franklin Resources shares are owned by institutional investors. Comparatively, 91.8% of State Street shares are owned by institutional investors. 23.1% of Franklin Resources shares are owned by company insiders. Comparatively, 0.3% of State Street shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Analyst Ratings
This is a summary of recent recommendations and price targets for Franklin Resources and State Street, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Franklin Resources | 5 | 6 | 1 | 0 | 1.67 |
State Street | 1 | 7 | 7 | 0 | 2.40 |
Franklin Resources currently has a consensus price target of $22.5625, indicating a potential downside of 15.97%. State Street has a consensus price target of $80.1333, indicating a potential upside of 6.35%. Given State Street's stronger consensus rating and higher possible upside, analysts plainly believe State Street is more favorable than Franklin Resources.
Dividends
Franklin Resources pays an annual dividend of $1.12 per share and has a dividend yield of 4.1%. State Street pays an annual dividend of $2.08 per share and has a dividend yield of 2.7%. Franklin Resources pays out 42.9% of its earnings in the form of a dividend. State Street pays out 33.7% 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 40 consecutive years and State Street has increased its dividend for 1 consecutive years. Franklin Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares Franklin Resources and State Street's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Franklin Resources | 14.15% | 12.15% | 8.08% |
State Street | 20.75% | 12.24% | 0.93% |
Summary
State Street beats Franklin Resources on 11 of the 17 factors compared between the two stocks.