Federated Hermes (FHI) AI Stock Analysis

• Market Cap: $4.09B
• Dividend Yield: 2.52%
• Average Volume (3M): 557.33K
• Price to Earnings (P/E): 11.0
• Beta (1Y): 0.52
• Revenue Growth: 9.32%
• EPS Growth: 53.51%
• Country: US
• Employees: 2,000
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): 1.34
• Shares Outstanding: 77,537,865
• 10 Day Avg. Volume: 645,361
• 30 Day Avg. Volume: 557,327
• PEG Ratio: -2.43
• Price to Book (P/B): 2.98
• Price to Sales (P/S): 2.00
• P/FCF Ratio: 9.53
• Enterprise Value/Market Cap: 0.91
• Enterprise Value/Revenue: 2.14
• Enterprise Value/Gross Profit: 3.17
• Enterprise Value/Ebitda: 6.79
• 1Y Price Target: $53.75
• Price Target Upside: 1.57% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 4
• EPS Forecast (FY): 4.95
• Revenue Forecast (FY): $1.74B

• Rating: 72 Outperform
• Price Target: $56.00 ▲(5.82% Upside)

Federated Hermes' strong financial performance, particularly in profitability and equity utilization, is a key strength. The earnings call provided a positive outlook with record assets under management and strategic initiatives in digital assets and real estate. While technical indicators suggest potential overbought conditions, the valuation remains attractive with a low P/E ratio and solid dividend yield. Overall, the stock presents a balanced opportunity with growth potential and some operational challenges.

Positive Factors

Record Assets Under Management

Achieving record AUM indicates strong market position and client trust, supporting long-term revenue growth through management fees.

Innovative Digital Asset Initiatives

Digital asset initiatives show commitment to innovation, potentially opening new revenue streams and enhancing competitive advantage.

FCP Acquisition

The acquisition of FCP expands Federated Hermes' U.S. real estate capabilities, diversifying income sources and enhancing growth potential.

Negative Factors

Equity Net Sales Slightly Negative

Negative equity net sales could indicate challenges in client retention or market competitiveness, impacting future revenue stability.

Alternative Private Markets Decline

A decline in alternative private markets assets suggests potential restructuring risks, affecting diversification and revenue growth.

FX and Related Expenses Increase

Increased FX expenses can pressure margins, especially if currency volatility persists, impacting profitability and cash flow.

Federated Hermes Business Overview & Revenue Model

Company Description

Federated Hermes, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides its services to individuals, including high net worth individuals, banking or thrift institutions, investment companies, pension and profit sharing plans, pooled investment vehicles, charitable organizations, state or municipal government entities, and registered investment advisors. Through its subsidiaries, it manages separate client-focused equity, fixed income, balanced and money market mutual funds along with separate client-focused equity, fixed income, money market, and balanced portfolios. Through its subsidiaries, the firm invests in the public equity and fixed income markets across the globe. It invests in growth and value stocks of small-cap, mid-cap, and large-cap companies. The firm makes its fixed income investments in ultra-short, short-term, and intermediate-term mortgage-backed, U.S. Government, U.S. corporate, high yield, and municipal securities. It employs both fundamental and quantitative analysis to make its equity investments. Federated Hermes, Inc. was founded in 1955 and is based in Pittsburgh, Pennsylvania with additional offices in New York City and London, United Kingdom.

How the Company Makes Money

Federated Hermes generates revenue primarily through management fees charged on the assets it manages across various investment products, including mutual funds, separate accounts, and institutional portfolios. The company earns a percentage of the assets under management (AUM), which can vary based on the type of investment product and the performance of the assets. Additionally, Federated Hermes may receive performance fees for exceeding certain investment benchmarks or targets. Their revenue model is also supported by distribution fees from selling investment products through financial intermediaries and partnerships with other financial institutions. The company emphasizes sustainable investing, which has attracted a growing clientele interested in ESG-compliant investment solutions, further contributing to its earnings.

Federated Hermes Financial Statement Overview

Summary

Federated Hermes demonstrates strong profitability and effective equity utilization, with consistent revenue growth. The balance sheet is stable, though there is a moderate reliance on debt. Cash flow management shows some areas for improvement, particularly in free cash flow growth. Overall, the company is financially sound but should monitor cost pressures and cash flow trends.

Income Statement

Federated Hermes shows a consistent revenue growth trend with a TTM growth rate of 3.63%. The company maintains strong profitability with a TTM net profit margin of 21.98% and an EBIT margin of 21.61%. However, the gross profit margin has decreased significantly in the TTM period compared to previous years, indicating potential cost pressures.

Balance Sheet

The company's balance sheet reflects a stable financial position with a manageable debt-to-equity ratio of 0.29 in the TTM period. Return on equity is robust at 31.72%, showcasing effective use of equity. However, the equity ratio indicates a moderate reliance on debt, which could pose risks if not managed carefully.

Cash Flow

Cash flow analysis reveals a slight decline in free cash flow growth in the TTM period, down by 6.71%. The operating cash flow to net income ratio is stable at 1.03, indicating good cash generation relative to earnings. However, the decline in free cash flow growth suggests potential challenges in cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.74B	1.63B	1.61B	1.45B	1.30B	1.45B
Gross Profit	1.17B	1.09B	1.05B	933.10M	767.96M	944.87M
EBITDA	548.00M	416.70M	427.60M	396.40M	396.28M	448.08M
Net Income	380.98M	268.31M	298.98M	239.50M	270.29M	326.36M
Balance Sheet
Total Assets	2.18B	2.08B	2.10B	2.02B	2.02B	2.06B
Cash, Cash Equivalents and Short-Term Investments	647.39M	641.04M	560.67M	521.75M	426.67M	438.77M
Total Debt	460.85M	461.97M	457.94M	452.78M	346.07M	212.77M
Total Liabilities	931.47M	933.96M	947.75M	912.97M	840.97M	686.86M
Stockholders Equity	1.19B	1.10B	1.13B	1.05B	1.11B	1.14B
Cash Flow
Free Cash Flow	259.15M	342.53M	303.92M	319.58M	159.96M	359.74M
Operating Cash Flow	262.85M	346.55M	311.83M	323.95M	170.38M	373.24M
Investing Cash Flow	29.30M	64.25M	-30.61M	-32.36M	10.82M	-24.82M
Financing Cash Flow	-165.67M	-286.40M	-243.09M	-168.51M	-249.47M	-295.14M

Federated Hermes Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 52.92
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 52.92 is above the 20-day moving average (MA) of 50.45, above the 50-day MA of 50.07, and above the 200-day MA of 46.10, indicating a bullish trend. The MACD of 0.74 indicates Negative momentum. The RSI at 66.27 is Neutral, neither overbought nor oversold. The STOCH value of 75.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FHI.

Federated Hermes Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VCTR	80 Outperform	$4.09B	16.09	16.46%	3.09%	33.03%	-3.55%
AB	76 Outperform	$3.58B	12.97	19.77%	8.85%	―	-12.92%
APAM	73 Outperform	$3.36B	11.57	62.04%	8.73%	5.46%	2.10%
FHI	72 Outperform	$4.09B	11.03	32.06%	2.52%	9.32%	53.51%
GBDC	71 Outperform	$3.57B	9.56	9.42%	11.52%	24.12%	1.09%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
CNS	60 Neutral	$3.20B	19.68	31.53%	3.94%	12.73%	19.01%

Federated Hermes Corporate Events

Federated Hermes Announces Leadership Changes Effective 2026

On December 2, 2025, Federated Hermes announced upcoming leadership changes effective April 30, 2026, as part of its succession plan. John B. Fisher will step back from his role as President and CEO of the Federated Advisory Companies, with Paul A. Uhlman taking over the position. Uhlman, who has been with the company for 35 years, will oversee global investment teams. Bryan M. Burke will succeed Uhlman as President of Federated Securities Corp. and lead global sales efforts. These changes are expected to ensure a smooth transition and continued focus on delivering long-term value and investment solutions to clients.

Federated Hermes to Acquire Stake in FCP Fund Manager

On October 23, 2025, Federated Hermes, Inc. announced an agreement to acquire an 80% stake in FCP Fund Manager, L.P., a U.S.-based real estate investment manager with $3.8 billion in assets. This acquisition, expected to close in the first half of 2026, will enhance Federated Hermes’ private markets and real estate capabilities in the U.S., complementing its existing operations in the U.K. The transaction, valued at up to $331 million, will be funded through cash and stock, with potential contingent consideration based on financial performance. This move aligns with Federated Hermes’ strategy to expand its private markets offerings and capitalize on growth opportunities in the U.S. multifamily sector.