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Federated Hermes (FHI)
NYSE:FHI
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Federated Hermes
(NYSE:FHI)
Rating:80Outperform
Price Target:
$51.00
▲(12.61%Upside)
Federated Hermes (FHI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.58B
Dividend Yield3%
Average Volume (3M)798.42K
Price to Earnings (P/E)12.8
Beta (1Y)0.57
Revenue Growth2.32%
EPS Growth1.08%
CountryUS
Employees2,000
SectorFinancial
Sector Strength81
IndustryAsset Management
Share Statistics
EPS (TTM)1.25
Shares Outstanding79,093,860
10 Day Avg. Volume729,528
30 Day Avg. Volume798,419
Financial Highlights & Ratios
PEG Ratio-3.00
Price to Book (P/B)2.98
Price to Sales (P/S)0.00
P/FCF Ratio9.74
Enterprise Value/Market Cap0.88
Enterprise Value/Revenue0.48
Enterprise Value/Gross Profit2.66
Enterprise Value/Ebitda2.00
Forecast
1Y Price Target
$41.25Price Target Upside-8.92% Downside
Rating ConsensusHold
Number of Analyst Covering4
Federated Hermes Business Overview & Revenue Model
Company DescriptionFederated 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 MoneyFederated Hermes generates revenue primarily through the management fees it charges for its investment products and services. These fees are typically based on a percentage of the assets under management (AUM) and can vary depending on the specific investment strategy or product. The company's key revenue streams include equity and fixed-income mutual funds, which attract individual and institutional investors seeking diverse investment opportunities. In addition to mutual funds, Federated Hermes earns money from separate account management services, offering customized investment strategies directly to large clients. Furthermore, Federated Hermes benefits from its strategic partnerships and acquisitions that enhance its product offerings and expand its global reach, contributing to increased AUM and, subsequently, higher management fees.
Federated Hermes Earnings Call Summary
Earnings Call Date:Apr 24, 2025
(Q1-2025)
| % Change Since: 19.22%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
Federated Hermes reported record assets under management and strong sales in equity and alternative markets, alongside strategic acquisitions and increased dividends. However, challenges included decreased market share in money markets, mixed equity performance, and net redemptions in fixed-income assets. Additionally, there are uncertainties related to tax rate fluctuations and FX impacts on expenses.Q1-2025 Updates
Positive Updates
Record Assets Under Management
Federated Hermes ended Q1 with record assets under management of $840 billion, driven by record money market assets of $637 billion.
Strong Equity Sales
Equity assets increased by $1.5 billion from year-end due mainly to net sales of $1.4 billion, with MDT strategies netting $2.5 billion in Q1, more than double the prior quarter's $1.2 billion.
Increase in Alternative Private Markets
Assets in the alternative private markets category increased by $562 million in Q1 due to FX rates and net sales of about $61 million.
Acquisition of Rivington Energy Management Limited
Federated Hermes completed the acquisition of a majority interest in a U.K. renewable energy company, enhancing their private markets platform.
Dividend Increase
The Board of Directors declared a $0.34 per share dividend, an increase of nearly 10% from the prior quarter dividend.
Negative Updates
Lower Money Market Fund Market Share
Federated Hermes' money market mutual fund market-share decreased slightly to about 7.10% at the end of Q1 from about 7.22% at the end of 2024.
Equity Performance Challenges
At the end of Q1, only 44% of equity funds were beating peers, with 31% in the top quartile of their category.
Fixed-Income Net Redemptions
For the first three weeks of Q2, combined fixed-income funds and SMAs had net redemptions of $88 million.
Tax Rate Fluctuations
The Q1 tax rate of 23.6% was lower than expected, but future expectations are between 25% to 28%, adding uncertainty to financial planning.
FX and VAT Impact on Expenses
Q1 operating expenses decreased due to a VAT refund and FX-related expense, indicating potential volatility in future quarters.
Company Guidance
During the Q1 2025 analyst call, Federated Hermes provided several key metrics and guidance indicators. The company reported record assets under management of $840 billion, driven mainly by money market assets totaling $637 billion. Equity assets increased by $1.5 billion, with significant contributions from MDT strategies, which saw net sales of $2.5 billion in Q1. Fixed income assets rose by approximately $1.4 billion, although this was offset by net redemptions. The alternative private markets category grew by $562 million, with ongoing fundraising efforts in European Direct Lending III and Global Private Equity Co-Invest funds. The company also highlighted a strategic acquisition in renewable energy, enhancing their private markets platform. Looking ahead, Federated Hermes has $3.9 billion in net institutional mandates yet to fund, including $1.8 billion in equities and $1.7 billion in private market strategies. Additionally, they anticipate fixed income net additions of about $400 million. The company continues to see opportunities in money market strategies, emphasizing their appeal during periods of market volatility.Federated Hermes Financial Statement Overview
Summary
Federated Hermes demonstrates strong financial health across all verticals, with consistent revenue growth, robust profitability margins, and prudent financial management. The balance sheet reflects stability with a healthy equity position and low leverage, while cash flows are strong, supporting operational and strategic initiatives. Continued focus on profitability and asset growth will be key to sustaining this positive trajectory.Income Statement
Federated Hermes shows strong revenue growth with a consistent upward trajectory, indicated by a TTM revenue of $1.66 billion, up from the previous $1.63 billion. The gross profit margin remains robust at 77.55%, reflecting efficient cost management. The net profit margin is solid at 17.34%, with EBIT and EBITDA margins at 27.74% and 25.58%, respectively, indicating healthy operational performance. However, a slight decline in net income indicates potential pressures on profitability.85
Very Positive
Balance Sheet
The balance sheet is strong with a favorable equity ratio of 71.49%, showcasing a stable financial foundation. The debt-to-equity ratio is low at 0.24, indicating prudent leverage management. Return on Equity (ROE) stands at approximately 20.11%, demonstrating effective use of equity to generate profits. However, total assets have slightly decreased, which could be a concern if it continues.78
Positive
Cash Flow
Cash flow analysis reveals a stable operating cash flow of $346.82 million and consistent free cash flow generation, with a growth rate of approximately 14.13% from the previous year. The operating cash flow to net income ratio of 1.20 indicates strong cash conversion efficiency. The free cash flow to net income ratio is robust at 1.21, underscoring the company's capability to sustain operations and fund growth.82
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.66B | 1.63B | 1.61B | 1.45B | 1.30B | 1.45B |
| Gross Profit | 1.18B | 1.09B | 1.05B | 933.10M | 767.96M | 944.87M |
| EBITDA | 430.87M | 416.70M | 427.60M | 411.80M | 396.28M | 448.08M |
| Net Income | 285.07M | 268.31M | 298.98M | 239.50M | 270.29M | 326.36M |
Balance Sheet | ||||||
| Total Assets | 2.00B | 2.08B | 2.10B | 2.02B | 2.02B | 2.06B |
| Cash, Cash Equivalents and Short-Term Investments | 541.83M | 641.04M | 560.67M | 521.75M | 426.67M | 438.77M |
| Total Debt | 459.10M | 461.97M | 457.94M | 365.98M | 223.35M | 75.00M |
| Total Liabilities | 858.72M | 933.96M | 947.75M | 912.97M | 904.17M | 923.84M |
| Stockholders Equity | 1.08B | 1.10B | 1.13B | 1.05B | 1.11B | 1.14B |
Cash Flow | ||||||
| Free Cash Flow | 345.91M | 342.53M | 303.92M | 319.58M | 159.96M | 359.74M |
| Operating Cash Flow | 346.82M | 346.55M | 311.83M | 323.95M | 170.38M | 373.24M |
| Investing Cash Flow | 32.41M | 64.25M | -30.61M | -32.36M | 10.82M | -24.82M |
| Financing Cash Flow | -357.71M | -286.40M | -243.09M | -168.51M | -249.47M | -295.14M |
Federated Hermes Technical Analysis
Positive
45.29
Price Trends
42.12
Positive
40.24
Positive
39.55
Positive
Market Momentum
0.76
Negative
73.23
Negative
93.61
Negative
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 45.29 is above the 20-day moving average (MA) of 43.02, above the 50-day MA of 42.12, and above the 200-day MA of 39.55, indicating a bullish trend. The MACD of 0.76 indicates Negative momentum. The RSI at 73.23 is Negative, neither overbought nor oversold. The STOCH value of 93.61 is Negative, 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 23 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
Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $4.34B | 14.36 | 26.57% | 3.03% | 6.53% | 36.51% | |
80 Outperform | $3.58B | 12.76 | 24.98% | 3.00% | 2.32% | 1.08% | |
77 Outperform | $3.75B | 13.10 | 69.81% | 5.85% | 7.18% | 10.17% | |
76 Outperform | $4.48B | 10.91 | 20.69% | 7.76% | ― | 53.17% | |
71 Outperform | $3.91B | 13.05 | 8.88% | 11.59% | 16.10% | -24.30% | |
69 Neutral | $3.97B | 25.47 | 35.42% | 3.18% | 10.26% | 19.56% | |
67 Neutral | $16.84B | 11.72 | 9.71% | 3.76% | 11.61% | -9.60% |
* Financial Sector Average
Performance Comparison
FHI
Federated Hermes
45.29
13.78
43.73%
AB
AllianceBernstein
41.24
10.35
33.51%
CNS
Cohen & Steers
77.87
7.73
11.02%
GBDC
Golub Capital Bdc
14.67
0.62
4.41%
APAM
Artisan Partners
46.50
9.68
26.29%
VCTR
Victory Capital Holdings
64.74
18.57
40.22%
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.