Federated Hermes (FHI) AI Stock Analysis

• Market Cap: $3.96B
• Dividend Yield: 2.59%
• Average Volume (3M): 595.12K
• Price to Earnings (P/E): 11.2
• Beta (1Y): 0.55
• Revenue Growth: 5.92%
• EPS Growth: 54.93%
• Country: US
• Employees: 2,000
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): 1.16
• Shares Outstanding: 77,551,060
• 10 Day Avg. Volume: 444,251
• 30 Day Avg. Volume: 595,119
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.84
• Enterprise Value/Revenue: 1.99
• Enterprise Value/Gross Profit: 2.98
• Enterprise Value/Ebitda: 6.45
• 1Y Price Target: $52.67
• Price Target Upside: 9.39% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 4

• Rating: 76 Outperform
• Price Target: $58.00 ▲(20.46% Upside)

Federated Hermes' strong financial performance and positive earnings call sentiment are key strengths, supported by a reasonable valuation. Technical indicators suggest caution, but the overall outlook remains positive due to robust asset management growth and strategic initiatives.

Positive Factors

Record Assets Under Management

Achieving record AUM indicates strong client trust and effective investment strategies, enhancing revenue potential through management fees.

Advancement in Digital Asset Integration

Integrating digital assets positions Federated Hermes at the forefront of financial innovation, potentially attracting tech-savvy investors and expanding market reach.

Strong Performance in Equity Strategies

Strong equity strategy performance reflects effective fund management and competitive advantage, supporting long-term growth in AUM and fee income.

Negative Factors

Decrease in Fixed Income Assets

Declining fixed income assets may indicate challenges in this segment, potentially affecting revenue from associated management fees.

Restructuring of U.K. Property Trust

Significant redemptions from the U.K. Property Trust could impact AUM and revenue, suggesting potential instability in real estate investments.

Lower Performance Fees and Carried Interest

Reduced performance fees can impact profitability, indicating possible challenges in achieving benchmark-beating returns across investment strategies.

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 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 Financial Statement Overview

Summary

Federated Hermes shows strong financial health with robust profitability and a stable balance sheet. The company maintains efficient operations and a conservative leverage position. However, the slowdown in revenue growth and recent declines in free cash flow growth are areas to monitor.

Income Statement

Federated Hermes demonstrates strong profitability with a consistent gross profit margin around 66% and a net profit margin improving to 21.8% in TTM. Revenue growth is modest but positive, indicating steady expansion. EBIT and EBITDA margins are robust, reflecting efficient operations. However, the revenue growth rate has slowed compared to previous years, which could indicate a maturing market or increased competition.

Balance Sheet

The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.22 in TTM, indicating conservative leverage. Return on equity is strong at 30.3%, showcasing effective use of equity to generate profits. The equity ratio is stable, suggesting a solid capital structure. However, the increase in total debt from previous periods could be a point of concern if it continues to rise.

Cash Flow

Operating cash flow to net income ratio is strong at 1.23, indicating good cash generation relative to net income. Free cash flow to net income ratio is slightly above 1, showing effective cash management. However, free cash flow growth has declined by 18.7% in TTM, which could impact future flexibility in investments or debt repayment.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.68B	1.63B	1.61B	1.45B	1.30B	1.45B
Gross Profit	1.12B	1.09B	1.05B	933.10M	767.96M	944.87M
EBITDA	518.55M	416.70M	427.60M	396.40M	396.28M	448.08M
Net Income	366.33M	268.31M	298.98M	239.50M	270.29M	326.36M
Balance Sheet
Total Assets	2.15B	2.08B	2.10B	2.02B	2.02B	2.06B
Cash, Cash Equivalents and Short-Term Investments	607.48M	641.04M	560.67M	521.75M	426.67M	438.77M
Total Debt	348.24M	461.97M	457.94M	452.78M	346.07M	212.77M
Total Liabilities	874.49M	933.96M	947.75M	912.97M	840.97M	686.86M
Stockholders Equity	1.58B	1.10B	1.13B	1.05B	1.11B	1.14B
Cash Flow
Free Cash Flow	281.22M	342.53M	303.92M	319.58M	159.96M	359.74M
Operating Cash Flow	276.94M	346.55M	311.83M	323.95M	170.38M	373.24M
Investing Cash Flow	-3.48M	64.25M	-30.61M	-32.36M	10.82M	-24.82M
Financing Cash Flow	-228.06M	-286.40M	-243.09M	-168.51M	-249.47M	-295.14M

Federated Hermes Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 48.15
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FHI, the sentiment is Negative. The current price of 48.15 is below the 20-day moving average (MA) of 51.54, below the 50-day MA of 52.37, and above the 200-day MA of 44.15, indicating a neutral trend. The MACD of -0.54 indicates Positive momentum. The RSI at 29.37 is Positive, neither overbought nor oversold. The STOCH value of 6.50 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FHI.

Federated Hermes Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FHI	76 Outperform	$3.96B	11.15	32.69%	2.59%	5.92%	54.93%
AB	76 Outperform	$4.35B	12.95	19.77%	8.60%	―	-12.92%
VCTR	76 Outperform	$4.22B	15.60	15.59%	2.99%	19.81%	12.83%
CNS	74 Outperform	$3.61B	22.20	31.53%	3.43%	12.87%	19.01%
GBDC	71 Outperform	$3.77B	10.01	9.33%	11.62%	32.19%	-13.72%
APAM	71 Outperform	$3.49B	11.74	67.97%	8.20%	9.98%	12.97%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%

Federated Hermes Corporate Events

Federated Hermes Maintains Stable Risk Profile: No New Threats Detected

Federated Hermes, Inc. continues to face the same risk factors as previously reported in their Annual Report on Form 10-K for the year ending December 31, 2024. This indicates that the company has not identified any new significant risks or changes to existing risks that could impact its financial performance or operations. Stakeholders should remain vigilant and consider these persistent risks when evaluating the company’s future prospects. The absence of new material changes suggests stability in the company’s risk profile, but ongoing monitoring is essential.

Federated Hermes Reports Strong Q2 2025 Earnings

Federated Hermes, Inc. is a global leader in active investment management, providing a wide range of investment solutions including equity, fixed-income, alternative/private markets, and liquidity management strategies to institutions and intermediaries worldwide. Headquartered in Pittsburgh, the company manages assets for corporations, government entities, insurance companies, and more.

Federated Hermes Reports Record AUM and Innovations

The recent earnings call of Federated Hermes, Inc. painted a generally positive picture, highlighting robust growth in equity strategies and record-breaking assets under management, particularly in money markets. The company showcased its innovative strides in digital assets, although it faced challenges with fixed income outflows and rising operating expenses.