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Federated Hermes (FHI)
NYSE:FHI
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Federated Hermes
(NYSE:FHI)
Rating:82Outperform
Price Target:
$57.00
▲(5.67% Upside)
Positive Factors
Business Growth
Federated's equity business is seeing improving success, particularly in its MDT equity franchise, which is expected to provide further room for growth.
Market Position
Federated's money market fund market share has stabilized, positioning it well to benefit from expected falling rates.
Negative Factors
Fund Flows
Federated experienced long-term net outflows of $0.5bn in 2Q25, contrasting with inflows of $1.1bn in 1Q25.
Governance
Governance remains an issue, with the CEO owning very little stock, contributing to shareholder unfriendly decisions.
Federated Hermes (FHI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.05B
Dividend Yield2.41%
Average Volume (3M)631.27K
Price to Earnings (P/E)11.6
Beta (1Y)0.56
Revenue Growth5.92%
EPS Growth54.93%
CountryUS
Employees2,000
SectorFinancial
Sector Strength71
IndustryAsset Management
Share Statistics
EPS (TTM)1.16
Shares Outstanding77,551,060
10 Day Avg. Volume883,069
30 Day Avg. Volume631,268
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap0.83
Enterprise Value/Revenue2.02
Enterprise Value/Gross Profit2.82
Enterprise Value/Ebitda7.76
Forecast
1Y Price Target
$51.60Price Target Upside-4.34% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Federated Hermes Business Overview & Revenue Model
Company DescriptionFederated Hermes (FHI) is a global investment management firm that provides a diverse range of investment solutions across various asset classes. The company operates in key sectors including equities, fixed income, money market, and alternative investments, serving institutional and retail clients. Federated Hermes is also known for its focus on responsible investing and sustainability, incorporating environmental, social, and governance (ESG) factors into its investment strategies.
How the Company Makes MoneyFederated Hermes generates revenue primarily through investment management fees charged to clients for managing their assets. These fees are typically based on a percentage of the assets under management (AUM), which can fluctuate with market conditions and client inflows or outflows. Additionally, the company earns performance fees when investment returns exceed certain benchmarks. Federated Hermes also benefits from revenue generated through its money market fund offerings, which provide liquidity and short-term investment options for clients. Significant partnerships with institutional investors and financial advisors enhance its distribution capabilities and client base, contributing to the company's overall earnings. Moreover, the firm's commitment to ESG investing attracts a growing segment of clients who prioritize sustainable investment practices, potentially leading to increased AUM and associated fee income.
Federated Hermes Earnings Call Summary
Earnings Call Date:Jul 31, 2025
(Q2-2025)
| % Change Since: 9.55%|
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
The earnings call was generally positive, with strong growth in equity strategies and record assets under management, particularly in money markets. There were notable innovations in digital assets. However, challenges included fixed income outflows and higher operating expenses.Q2-2025 Updates
Positive Updates
Record Assets Under Management
Federated Hermes ended Q2 2025 with record assets under management of $846 billion, led by gains from equity strategies which increased by $8.1 billion or 10% from the prior quarter.
Significant Equity Net Sales Growth
Second quarter equity net sales were $1.8 billion, representing an organic growth rate of just under 9%. MDT equity strategies had net sales of $3.8 billion, up from $3.3 billion in the first quarter.
Strong Money Market Fund Performance
Money market fund assets reached a record high at the end of Q2, increasing by $3.1 billion to reach $468 billion.
Innovations in Digital Assets
Federated Hermes is actively participating in the development of tokenized money market funds and digital asset infrastructure, collaborating with Bank of New York and Goldman Sachs on blockchain initiatives.
Successful Acquisitions and Product Development
Completion of the acquisition of a majority interest in Rivington Energy Management Limited, enhancing Private Markets platform with renewable energy expertise.
Negative Updates
Fixed Income Outflows
Fixed income assets decreased by about $800 million or 1% in the second quarter due to net redemptions of $2.4 billion.
Decline in Performance Fees
Total Q2 carried interest and performance fees were $1.4 million compared to $5.9 million in the previous quarter.
UK Property Trust Restructuring
Expected $1.2 billion in redemptions from the restructuring of the U.K. Property Trust in the third quarter.
Higher Operating Expenses
Q2 operating expenses increased from the prior quarter, attributed to the absence of a $12.9 million VAT refund seen in Q1.
Company Guidance
In the Federated Hermes, Inc. Second Quarter 2025 Analyst Call, the company reported record assets under management reaching $846 billion, with a notable increase in equity assets by $8.1 billion or 10% from the previous quarter. Equity net sales were $1.8 billion, reflecting an organic growth rate of nearly 9%. The MDT equity strategies contributed significantly, with net sales rising to $3.8 billion. The company experienced a decrease in fixed-income assets by about $800 million due to net redemptions of $2.4 billion, though this was partially offset by market valuation improvements and favorable FX rates. Alternative private markets saw a 7% increase in assets to $1.3 billion, driven by FX impacts and net sales. Money market fund assets reached a record high of $468 billion, even with seasonal patterns causing separate account decreases. The firm is actively engaged in digital asset initiatives, including tokenized money market funds, as part of a collaboration with Bank of New York and Goldman Sachs. The company also announced new share repurchase programs and is pursuing potential acquisitions, particularly in the private markets space, to drive future growth.Federated Hermes Financial Statement Overview
Summary
Federated Hermes demonstrates strong financial health 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.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
53.94
Price Trends
46.22
Positive
43.13
Positive
41.20
Positive
Market Momentum
1.96
Negative
83.61
Negative
97.49
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 53.94 is above the 20-day moving average (MA) of 49.94, above the 50-day MA of 46.22, and above the 200-day MA of 41.20, indicating a bullish trend. The MACD of 1.96 indicates Negative momentum. The RSI at 83.61 is Negative, neither overbought nor oversold. The STOCH value of 97.49 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 (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $4.05B | 11.59 | 32.69% | 2.41% | 5.92% | 54.93% | |
81 Outperform | $4.85B | 17.94 | 15.59% | 2.54% | 19.81% | 12.83% | |
76 Outperform | $4.44B | 11.95 | 18.55% | 8.20% | ― | 16.78% | |
75 Outperform | $3.84B | 12.90 | 67.97% | 7.47% | 9.98% | 12.97% | |
71 Outperform | $3.94B | 10.46 | 9.33% | 11.22% | 32.19% | -13.72% | |
71 Outperform | $3.84B | 23.94 | 32.70% | 3.20% | 12.95% | 23.72% | |
65 Neutral | £5.45B | 8.77 | 9.49% | 5.11% | 10.05% | -13.15% |
* Financial Sector Average
Performance Comparison
FHI
Federated Hermes
53.94
21.34
65.46%
AB
AllianceBernstein
41.22
9.38
29.46%
CNS
Cohen & Steers
76.63
-5.61
-6.82%
GBDC
Golub Capital Bdc
14.80
1.68
12.80%
APAM
Artisan Partners
47.79
9.82
25.86%
VCTR
Victory Capital Holdings
71.19
19.97
38.99%
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.