Federated Hermes (FHI) AI Stock Analysis

• Market Cap: $4.34B
• Dividend Yield: 2.46%
• Average Volume (3M): 639.30K
• Price to Earnings (P/E): 10.9
• Beta (1Y): 0.50
• Revenue Growth: 9.32%
• EPS Growth: 53.51%
• Country: US
• Employees: 2,000
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): 1.39
• Shares Outstanding: 77,537,865
• 10 Day Avg. Volume: 564,720
• 30 Day Avg. Volume: 639,298
• PEG Ratio: 0.15
• Price to Book (P/B): 3.27
• Price to Sales (P/S): 2.17
• P/FCF Ratio: 13.15
• Enterprise Value/Market Cap: 0.91
• Enterprise Value/Revenue: 2.20
• Enterprise Value/Gross Profit: 3.18
• Enterprise Value/Ebitda: 7.05
• 1Y Price Target: $55.67
• Price Target Upside: -0.61% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 3
• EPS Forecast (FY): 5.15
• Revenue Forecast (FY): $1.95B

• Rating: 79 Outperform
• Price Target: $64.00 ▲(14.27% Upside)
• Action: Reiterated Date: 02/28/26
• Date: Action: Reiterated 02/28/26

The score is driven primarily by strong underlying profitability/ROE and improved leverage, supported by favorable valuation (low P/E and a solid dividend). Technicals are constructive with price above major moving averages, though momentum looks somewhat stretched. Earnings call commentary was broadly positive on AUM and flows but tempered by cost pressures and near-term seasonality, while the disclosed legal action adds a modest risk overhang.

Positive Factors

Record AUM & money-market scale

Scale of ~$900B AUM and a giant money-market franchise provide durable, recurring management fees and cash-like liabilities that stabilize revenue. Large, sticky cash balances offer a steady fee base, distribution muscle and cross-sell leverage to institutional and intermediary clients over time.

High margins and return on equity

Sustained high operating and net margins alongside very strong ROE indicate efficient fee economics and disciplined cost structure. Improved leverage boosts capital efficiency, supporting cash generation, dividends and reinvestment capacity across market cycles, underpinning long-term shareholder returns.

Private markets + product performance

Growing private markets fundraising and a multi‑year pipeline diversify fee streams toward higher‑delta, longer‑duration management fees. Strong MDT and equity performance drives win rates and client retention, strengthening competitive differentiation and lowering AUM volatility over the medium term.

Negative Factors

Fixed income outflows

Material fixed-income redemptions reduce a meaningful fee pool and can persist if investor preferences shift or mandates re-price lower fees. Sustained outflows pressure total AUM, fee revenue and diversification, making results more sensitive to product mix and market cycles over the medium term.

Higher distribution expense from share-class mix

A structural shift into share classes with higher distribution fees raises recurring operating expenses and compresses net margins. If intermediary-driven share-class demand persists, distribution costs may remain elevated, reducing operating leverage and constraining durable margin expansion.

Legal proceedings over wind farm investment

A substantial derivative/direct claim tied to a past infrastructure investment introduces potential financial, reputational and governance risk. Even if management expects no material impact, litigation outcomes, insurance recoveries, or governance findings could affect capital, deal underwriting standards and investor confidence.

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

Strong profitability and returns (2025 operating margin ~29%, net margin ~22%, ROE ~34%) with improved leverage (debt-to-equity ~0.29 in 2025). Offsetting factors are revenue growth volatility and some variability in cash-flow coverage (FCF-to-net income ~0.95 in 2025).

Income Statement

Revenue has grown over the last several years (from ~$1.45B in 2020 to ~$1.80B in 2025), with modest growth in 2024–2025 after stronger gains in 2022–2023. Profitability is a clear strength: 2025 net margin is ~22% and operating margin is ~29%, both improved versus 2024. The main weakness is growth volatility (notably the revenue decline in 2021 and slower growth more recently), which suggests results can be sensitive to market/asset levels and fee pressure.

Balance Sheet

Leverage looks reasonable and has improved recently: debt-to-equity declined to ~0.29 in 2025 from ~0.42 in 2024, with equity rising to ~$1.20B. Returns on shareholder capital are strong (return on equity ~34% in 2025), indicating efficient profitability. The key watch-out is that debt levels, while manageable, have fluctuated over time, and total assets/equity growth has been steady rather than accelerating.

Cash Flow

Cash generation is generally solid and closely tracks earnings: free cash flow is near net income across years (~0.94–1.00x), indicating good earnings quality. Free cash flow growth rebounded strongly in 2025 (+~15%), but cash flow coverage of net income dipped below 1.0 in 2025 (~0.95) after being stronger in 2022–2024, and operating/free cash flow also shows some year-to-year volatility (notably weaker in 2021).

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.80B	1.63B	1.61B	1.45B	1.30B
Gross Profit	1.37B	1.09B	1.05B	933.10M	767.96M
EBITDA	513.88M	416.70M	427.60M	396.40M	396.28M
Net Income	403.30M	268.31M	298.98M	239.50M	270.29M
Balance Sheet
Total Assets	2.23B	2.08B	2.10B	2.02B	2.02B
Cash, Cash Equivalents and Short-Term Investments	724.30M	641.04M	560.67M	521.75M	426.67M
Total Debt	348.37M	461.97M	457.94M	452.78M	346.07M
Total Liabilities	965.86M	933.96M	947.75M	912.97M	840.97M
Stockholders Equity	1.20B	1.10B	1.13B	1.05B	1.11B
Cash Flow
Free Cash Flow	297.35M	342.53M	303.92M	319.58M	159.96M
Operating Cash Flow	297.35M	346.55M	311.83M	323.95M	170.38M
Investing Cash Flow	2.01M	64.25M	-30.61M	-32.36M	10.82M
Financing Cash Flow	-237.88M	-286.40M	-243.09M	-168.51M	-249.47M

Federated Hermes Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 56.01
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 56.01 is above the 20-day moving average (MA) of 54.40, above the 50-day MA of 53.45, and above the 200-day MA of 49.43, indicating a bullish trend. The MACD of 0.92 indicates Negative momentum. The RSI at 57.94 is Neutral, neither overbought nor oversold. The STOCH value of 83.27 is Negative, 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
FHI	79 Outperform	$4.34B	10.92	34.09%	2.46%	9.32%	53.51%
AB	78 Outperform	$3.62B	13.23	18.35%	8.93%	―	-12.92%
VCTR	76 Outperform	$4.43B	16.98	18.61%	3.00%	33.03%	-3.55%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
CNS	65 Neutral	$3.41B	22.49	31.53%	3.92%	12.73%	19.01%
APAM	65 Neutral	$3.25B	9.94	63.64%	8.72%	5.46%	2.10%
GBDC	63 Neutral	$3.16B	9.65	8.34%	11.70%	24.12%	1.09%

Federated Hermes Corporate Events

Federated Hermes Faces Legal Action Over Wind Farm Investment

On January 5, 2026, Hermes GPE LLP and Hermes Infrastructure II GP LLP, subsidiaries of Federated Hermes, acknowledged service of legal proceedings in the High Court in London brought by Aberdeen City Council as administering authority of the Aberdeen City Council Pension Fund, relating to a 2019 investment of about £104 million by Hermes Infrastructure Fund II in the Ventus Portfolio, a group of five Swedish onshore wind farms that has since declined in value. The plaintiff is pursuing derivative claims on behalf of the fund’s general partner against Hermes GPE for alleged professional negligence and breach of the fund’s limited partnership agreement, and direct claims against the general partner for failing to properly oversee the manager, seeking recovery tied to an alleged £87 million diminution in value (including approximately 38.1% of that amount on its own direct claim), while Federated Hermes and its affiliates deny the allegations, say the claims lack merit, do not expect a material adverse impact on the group’s financial position, and have notified their insurers as a precaution.

The most recent analyst rating on (FHI) stock is a Hold with a $58.00 price target. To see the full list of analyst forecasts on Federated Hermes stock, see the FHI Stock Forecast page.

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.

The most recent analyst rating on (FHI) stock is a Buy with a $55.00 price target. To see the full list of analyst forecasts on Federated Hermes stock, see the FHI Stock Forecast page.