Let's talk about the popular Franklin Resources Inc (NYSE:BEN). The company's shares received a lot of attention from a substantial price movement on the NYSE in the over the last few months, increasing to $47.28 at one point, and dropping to the lows of $41.77. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether BEN's current trading price of $43.4 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at BEN’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Franklin Resources

What is BEN worth?

According to my relative valuation model, BEN seems to be currently fairly priced. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that BEN’s ratio of 14.1x is trading slightly below its industry peers’ ratio of 20.3x, which means if you buy BEN today, you’d be paying a reasonable price for it. And if you believe that BEN should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since BEN’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much BEN moves relative to the rest of the market.

What kind of growth will BEN generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares.Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -7.14% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for BEN. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? BEN seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on BEN, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on BEN for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on BEN should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Franklin Resources. You can find everything you need to know about BEN in the latest infographic research report. If you are no longer interested in Franklin Resources, you can use our free platform to see my list of over 50 other stocks with a high growth potential.