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Federated Hermes
(NYSE:FHI)
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Rating:83Outperform
Price Target:
$70.00
▲(20.86% Upside)
Action:Reiterated
Date:08/01/26
FHI scores well primarily on strong financial performance (high margins, improving leverage, and excellent free-cash-flow conversion). Valuation is also favorable (low P/E with a solid dividend yield). Technicals are supportive with price above major moving averages, while the earnings-call outlook is constructive but tempered by near-term flow volatility and acquisition-related expense noise.
Positive Factors
Low Leverage / Strong Balance Sheet
Federated Hermes' low leverage (debt ≈0.2x equity) materially improves financial flexibility. This durable strength reduces interest and refinancing risk, supports capital allocation (dividends, buybacks, M&A) and provides a cushion during AUM or flow stress, preserving long‑term strategic optionality for the firm.
Negative Factors
Uneven Revenue Growth
Top‑line growth is modest and inconsistent, which weakens predictability of fee revenue that underpins profitability. For asset managers, uneven revenue makes forecasting capital deployment and margin expansion harder, and increases sensitivity of returns to market performance and net flow variability over the medium term.
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Positive Factors
Negative Factors
Low Leverage / Strong Balance Sheet
Federated Hermes' low leverage (debt ≈0.2x equity) materially improves financial flexibility. This durable strength reduces interest and refinancing risk, supports capital allocation (dividends, buybacks, M&A) and provides a cushion during AUM or flow stress, preserving long‑term strategic optionality for the firm.
Read all positive factors
Federated Hermes (FHI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.71B
Dividend Yield2.29%
Average Volume (3M)582.52K
Price to Earnings (P/E)11.6
Beta (1Y)0.57
Revenue Growth15.25%
EPS Growth19.43%
CountryUS
Employees2,091
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)5.51
Shares Outstanding74,651,280
10 Day Avg. Volume483,531
30 Day Avg. Volume582,520
Financial Highlights & Ratios
PEG Ratio0.15
Price to Book (P/B)3.27
Price to Sales (P/S)2.16
P/FCF Ratio13.27
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$66.35Price Target Upside14.55% Upside
Rating ConsensusHold
Number of Analyst Covering5
EPS Forecast (FY)5.28
Revenue Forecast (FY)$1.97B
Federated Hermes Business Overview & Revenue Model
Company Description
Federated Hermes, Inc. (FHI) is a publicly listed holding company primarily engaged in asset management. Through its extensive network of subsidiaries, the firm delivers specialized financial services to a wide array of clients. These include high...
How the Company Makes Money
Federated Hermes primarily earns revenue by charging fees based on assets under management (AUM) and by providing investment-related services. Key revenue streams typically include: (1) Investment advisory and management fees: recurring fees charg...
Federated Hermes Earnings Call Summary
Earnings Call Date:Jul 30, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 22, 2026
Earnings Call Sentiment Positive
The call presented multiple strong operating highlights: record AUM ($912B), record equity assets ($110B), exceptional MDT inflows and performance, expanding private market assets and a healthy revenue increase. These positives were tempered by near-term flow volatility (equity net redemptions including an expected $3B sub-advisory outflow), slight quarter-over-quarter declines in money market assets and market share, and one-time acquisition-related expense pressure from the FCP transaction. Management provided a clear pipeline of expected net sales and explained the acquisition costs as largely nonrecurring, supporting a constructive medium-term outlook despite short-term noise.Positive Updates
Record Assets Under Management
AUM reached a record $912 billion at the end of Q2, led by equity and private market growth; managed assets reported a few days later were ~ $899 billion (breakdown: ~$665B money markets, $109B equities, $100B fixed income, $23B alternatives, $3B multi-asset).
Negative Updates
Equity Net Redemptions
Equity net redemptions totaled $1.1 billion in Q2, which included an expected $3.0 billion global equity sub-advisory redemption; net flows pressure in the quarter despite gross sales strength.
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Q2-2026 Updates
Positive
Negative
Record Assets Under Management
AUM reached a record $912 billion at the end of Q2, led by equity and private market growth; managed assets reported a few days later were ~ $899 billion (breakdown: ~$665B money markets, $109B equities, $100B fixed income, $23B alternatives, $3B multi-asset).
Read all positive updates
Company Guidance
Management’s forward guidance for Q3 called for roughly $1.7 billion of net equity sales (including about $1.6 billion to MDT and ~$150 million to global equity), roughly $1.3 billion of net private markets inflows (≈$700 million direct lending, ~$538 million private equity, ~$100 million trade finance), and about $300 million of fixed‑income net sales (total return, low‑duration and high yield); they began Q3 with about $3.4 billion of net institutional wins yet to fund, expect a 2026 effective tax rate in the 25%–28% range (Q2 was 25.8%), and flagged near‑term expense moves tied to the FCP deal (one‑time comp not repeating so comp expense could be ~ $5M lower next quarter, professional services down ~ $6M, systems/communications up a couple million, intangible amortization continuing). They also reiterated seasonality in money markets (end‑of‑Q2 managed assets ≈$500B, money market mutual funds ≈$490B, July range $490–$501B with a $496B average, estimated market share ~6.7% vs. 6.9% in Q1; Q2 MM assets were down ~$7.9B QoQ but up ~ $32B YoY).Federated Hermes Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
84
Very Positive
Cash Flow
88
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.94B | 1.81B | 1.63B | 1.61B | 1.45B | 1.30B |
| Gross Profit | 1.39B | 1.33B | 1.09B | 1.05B | 933.10M | 767.96M |
| EBITDA | 593.78M | 582.52M | 416.70M | 427.60M | 396.40M | 408.08M |
| Net Income | 412.22M | 403.30M | 268.31M | 298.98M | 239.50M | 270.29M |
Balance Sheet | ||||||
| Total Assets | 2.33B | 2.29B | 2.08B | 2.10B | 2.02B | 2.02B |
| Cash, Cash Equivalents and Short-Term Investments | 420.61M | 725.64M | 641.04M | 560.67M | 521.75M | 426.67M |
| Total Debt | 451.94M | 457.01M | 461.97M | 457.94M | 452.78M | 346.07M |
| Total Liabilities | 933.30M | 1.03B | 933.96M | 947.75M | 912.97M | 840.97M |
| Stockholders Equity | 1.25B | 1.20B | 1.10B | 1.13B | 1.05B | 1.11B |
Cash Flow | ||||||
| Free Cash Flow | 369.83M | 294.58M | 342.53M | 303.92M | 319.58M | 159.96M |
| Operating Cash Flow | 373.99M | 297.35M | 346.55M | 311.83M | 323.95M | 170.38M |
| Investing Cash Flow | -189.72M | 165.93M | 64.25M | -30.61M | -32.36M | 10.82M |
| Financing Cash Flow | -248.66M | -401.81M | -286.40M | -243.09M | -168.51M | -249.47M |
Federated Hermes Technical Analysis
Positive
57.92
Price Trends
58.44
Positive
56.98
Positive
54.29
Positive
Market Momentum
1.57
Negative
63.17
Neutral
56.20
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FHI, the sentiment is Positive. The current price of 57.92 is below the 20-day moving average (MA) of 60.27, below the 50-day MA of 58.44, and above the 200-day MA of 54.29, indicating a bullish trend. The MACD of 1.57 indicates Negative momentum. The RSI at 63.17 is Neutral, neither overbought nor oversold. The STOCH value of 56.20 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FHI.
Federated Hermes Risk Analysis
Federated Hermes disclosed 24 risk factors in its most recent earnings report. Federated Hermes reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Federated Hermes Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
83 Outperform | $4.71B | 11.58 | 34.06% | 2.42% | 15.25% | 19.43% | |
82 Outperform | $6.85B | 20.70 | 19.29% | 1.98% | 50.24% | 33.56% | |
78 Outperform | $4.22B | 25.78 | 29.72% | 3.17% | 12.59% | 2.98% | |
75 Outperform | $3.45B | 10.95 | 25.41% | 9.17% | ― | 0.94% | |
73 Outperform | $3.42B | 9.95 | 70.99% | 10.07% | 7.40% | 9.66% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
62 Neutral | $3.41B | 23.96 | 3.82% | 11.27% | -8.83% | -54.08% |
* Financial Sector Average
FHI
Federated Hermes
63.00
10.75
20.57%
AB
AllianceBernstein
36.45
-1.13
-3.00%
CNS
Cohen & Steers
84.82
9.67
12.87%
GBDC
Golub Capital Bdc
13.09
-0.28
-2.12%
APAM
Artisan Partners
41.78
-2.25
-5.10%
VCTR
Victory Capital Holdings
116.23
46.45
66.56%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.