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Federated Hermes, Inc. (FHI)
:FHI
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Federated Hermes
(NYSE:FHI)
74Outperform
Federated Hermes (FHI) vs. S&P 500 (SPY)
Market Cap
$3.17B
Dividend Yield3.3%
Average Volume (3M)853.77K
Price to Earnings (P/E)11.6
Beta (1Y)0.43
Revenue Growth1.64%
EPS Growth-6.23%
CountryUS
Employees2,025
SectorFinancial
Sector Strength77
IndustryAsset Management Services
Share Statistics
EPS (TTM)3.19
Shares Outstanding81,302,970
10 Day Avg. Volume1,087,801
30 Day Avg. Volume853,773
Financial Highlights & Ratios
PEG Ratio10.44
Price to Book (P/B)N/A
Price to Sales (P/S)1.94
Price to Cash Flow (P/CF)6.30
P/FCF Ratio6.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$41.88Price Target Upside7.36% Upside
Rating ConsensusHold
Number of Analyst Covering8
Federated Hermes Business Overview & Revenue Model
Company DescriptionFederated Hermes, Inc. engages in the provision of investment management products and related financial services. It sponsors, markets and provides investment-related services to sponsored investment companies, Federated Funds, and Separate Accounts which include separately managed accounts (SMAs), institutional accounts, sub-advised funds and other managed products in both domestic and international markets. The company was founded by John F. Donahue and Richard B. Fisher in October 1955 and is headquartered in Pittsburgh, PA.
How the Company Makes MoneyFederated Hermes makes money primarily through the management fees it charges clients for its investment services. These fees are typically calculated as a percentage of the assets under management (AUM) and vary based on the type of investment product or service. The company offers a range of investment products, including mutual funds, separate accounts, and sub-advised funds, catering to both institutional and retail investors. In addition to management fees, Federated Hermes earns performance fees from certain investment products, which are contingent on surpassing specific performance benchmarks. The company also generates revenue from distribution fees and other service fees related to its investment products. Strategic partnerships and collaborations with financial advisors, institutions, and distribution networks further enhance Federated Hermes’ market reach and contribute to its revenue streams.
Federated Hermes Financial Statement Overview
Summary
Federated Hermes demonstrates a well-rounded financial profile with strong revenue and profit growth, a stable balance sheet, and healthy cash flow generation. While there are areas of concern, such as margin pressures and variability in free cash flow growth, the company is positioned well within the asset management industry, benefiting from its solid financial practices and strategic growth initiatives.Income Statement
Federated Hermes shows solid financial performance with a stable gross profit margin and positive net income. The company has maintained a consistent revenue growth trend, although there was a slight dip in EBIT and EBITDA margins in the most recent year compared to the previous period. Overall, the income statement reflects a profitable and growing business, albeit with some margin pressures.75
Positive
Balance Sheet
The balance sheet is strong, with a healthy equity ratio indicating a solid financial structure. The debt-to-equity ratio is at a manageable level, suggesting prudent leverage management. Return on equity remains robust, reflecting efficient use of shareholder capital. The balance sheet reflects stability and effective financial management.80
Positive
Cash Flow
Federated Hermes displays a positive cash flow position with consistent operating cash flow. However, the free cash flow growth rate has shown variability, indicating potential challenges in maintaining cash reserves. The operating cash flow to net income ratio is strong, reflecting good cash generation capabilities relative to reported earnings.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.63B | 1.61B | 1.45B | 1.30B | 1.45B |
| Gross Profit | ||||
| 1.63B | 1.05B | 933.10M | 767.96M | 944.87M |
| EBIT | ||||
| 361.47M | 387.55M | 336.80M | 366.27M | 418.15M |
| EBITDA | ||||
| 416.70M | 427.60M | 411.80M | 396.28M | 448.08M |
| Net Income Common Stockholders | ||||
| 268.31M | 298.98M | 239.50M | 270.29M | 326.36M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 504.44M | 560.67M | 521.75M | 426.67M | 438.77M |
| Total Assets | ||||
| 2.08B | 2.10B | 2.02B | 2.02B | 2.06B |
| Total Debt | ||||
| 461.97M | 457.94M | 365.98M | 223.35M | 75.00M |
| Net Debt | ||||
| -42.47M | 74.76M | 29.19M | -9.98M | -226.82M |
| Total Liabilities | ||||
| 933.96M | 947.75M | 912.97M | 904.17M | 923.84M |
| Stockholders Equity | ||||
| 1.10B | 1.13B | 1.05B | 1.11B | 1.14B |
| Cash Flow | Free Cash Flow | |||
| 346.55M | 303.92M | 319.58M | 159.96M | 359.74M |
| Operating Cash Flow | ||||
| 346.55M | 311.83M | 323.95M | 170.38M | 373.24M |
| Investing Cash Flow | ||||
| 64.25M | -30.61M | -32.36M | 10.82M | -24.82M |
| Financing Cash Flow | ||||
| -286.40M | -243.09M | -168.51M | -249.47M | -295.14M |
Federated Hermes Technical Analysis
Positive
39.01
Price Trends
38.63
Positive
39.77
Negative
36.63
Positive
Market Momentum
-0.09
Negative
54.22
Neutral
44.05
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 39.01 is above the 20-day moving average (MA) of 38.40, above the 50-day MA of 38.63, and above the 200-day MA of 36.63, indicating a bullish trend. The MACD of -0.09 indicates Negative momentum. The RSI at 54.22 is Neutral, neither overbought nor oversold. The STOCH value of 44.05 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 22 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 (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $5.92B | 14.20 | 8.74% | 4.29% | 18.85% | 7.96% | |
74 Outperform | $3.17B | 11.63 | 22.74% | 3.30% | 1.64% | -6.23% | |
71 Outperform | $6.84B | 12.70 | 5.31% | 5.48% | 3.97% | ― | |
70 Outperform | $20.71B | 10.05 | 20.60% | 5.39% | 9.80% | 17.87% | |
68 Neutral | $3.17B | 10.53 | 66.31% | 7.74% | 12.37% | 14.69% | |
66 Neutral | $10.26B | 29.01 | 2.76% | 6.61% | 9.48% | -65.57% | |
64 Neutral | $14.07B | 10.39 | 9.05% | 4.28% | 17.01% | -7.59% |
* Financial Sector Average
Performance Comparison
FHI
Federated Hermes
39.01
6.11
18.57%
BEN
Franklin Resources
19.52
-5.88
-23.15%
IVZ
Invesco
15.28
0.73
5.02%
TROW
T Rowe Price
93.04
-16.73
-15.24%
APAM
Artisan Partners
39.54
<0.01
0.03%
JHG
Janus Henderson Group
37.56
7.62
25.45%
Federated Hermes Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -1.09% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted record-breaking assets under management and strong performance in MDT strategies, along with an expansion of product offerings. However, these positive aspects were balanced by challenges such as decreases in equity and fixed income assets, a reduction in alternative private markets assets, and FX-related expense increases.Highlights
Record Assets Under Management
Federated Hermes ended 2024 with record assets under management of $830 billion, driven by record money market assets of $630 billion.
Strong Performance in MDT Strategies
MDT strategies reached $13 billion in assets at year-end, up 70% from the previous year. They recorded $3.4 billion in net sales in 2024, significantly increasing from $411 million in 2023.
Expansion of Product Offerings
Launched four active ETFs and a new collective fund in the MDT product set, with assets totaling approximately $424 million as of January 24th.
Positive Start to 2025
Began 2025 with about $3.7 billion in net institutional mandates yet to fund, with expected net additions in equities, private market strategies, and fixed income.
Increase in Total Revenue
Total revenue for Q4 increased by $16.2 million or 4% from the prior quarter, driven by higher revenue from equity and money market assets.
Lowlights
Decrease in Equity and Fixed Income Assets
Equities decreased by $4.2 billion and fixed income assets decreased by $2.1 billion in Q4, attributed to market valuations and net redemptions.
Alternative Private Markets Asset Decrease
Assets in the alternative private markets category decreased by $1.8 billion in Q4, mainly due to FX impacts and net redemptions.
FX-related Expense Increase
Q4 operating expenses increased by $17.5 million from Q3, with $13.8 million attributed to FX-related expense increases due to the weakening of the pound.
Slight Decrease in Money Market Mutual Fund Market Share
Estimate of money market mutual fund market share decreased slightly from 7.32% in Q3 to 7.22% at the end of Q4.
Company Guidance
In the Federated Hermes Q4 2024 Analyst Call, the company reported a record high in assets under management, totaling $830 billion by the end of the fiscal year. This was primarily driven by money market assets, which reached $630 billion. The equity segment saw a decrease of $4.2 billion due to $2.5 billion in net redemptions and a $1.3 billion FX impact. However, MDT strategies experienced significant growth, with assets increasing by 70% from the previous year to $13 billion, and net sales reaching $3.4 billion in 2024. Fixed income assets decreased by approximately $2.1 billion due to market valuations and net redemptions. The company also highlighted their alternative private markets category, which saw a decrease of $1.8 billion due to FX rates and net redemptions. Federated Hermes has several new funds in the pipeline, including the European Direct Lending III and various private equity funds, indicating a strategic focus on expanding their alternative asset offerings. The call also discussed the positive outlook for money market strategies amid a higher interest rate environment, benefiting from attractive yields compared to traditional bank deposits. Revenue for Q4 increased by 4%, driven by higher revenue from equity and money market assets, despite some FX-related expense increases. Looking ahead, the company anticipates potential net additions in equities, private market strategies, and fixed income, with a continued focus on capturing growth in money market strategies.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.