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Rising Assets Aid Federated Hermes (FHI) Despite High Costs
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On Jun 8, we issued an updated research report on Federated Hermes (FHI - Free Report) . The company’s top-line growth continues to get support from increasing assets under management. Also, focus on global expansion has benefitted it in the past few years. However, escalating expenses on higher compliance-related fees might hinder the company’s bottom-line expansion.
Federated Hermes' earnings estimates for the current year have been revised 4.6% upward to $2.28 over the past 60 days. The company carries a Zacks Rank #3 (Hold) at present.
Shares of Federated Hermes have lost 18.8% so far this year compared with the industry’s 2% decline.
Despite prevailing pressure for money market funds amid stringent regulations, the company has been acquiring money market assets, which enables it to provide various new fund offerings, thus benefiting its clients. Notably, it continues to seek alliances and acquisitions to fortify its business in Europe and the Asia Pacific region as well as in the United States and the rest of the Americas.
Also, Federated Hermes has been gradually reducing waived fees in money market funds to enable certain funds to maintain positive or zero net yields. The pace of such waivers has been declining recently. Notably, there was no waiver in 2019. We believe that such positive impacts will support the company’s top-line performance in the near term.
However, its operating expenses have witnessed a four-year CAGR (2016-2019) of 6.6%, with some annual volatility. Also, given the strictly-regulated nature of the investment management business, compliance-related fees are expected to continue escalating in the near term.
As of Mar 31, 2020, the company holds debt worth $317 million. The debt level has witnessed a rise over the past few quarters and its debt-to-capital ratio (currently 0.23) has also been increasing. Thus, we believe that Federated Hermes carries credit risk, and a higher likelihood of default of interest and debt repayments if the economic situation worsens.
Key Picks
Central Valley Community Bancorp’s 2020 earnings estimates have been revised 28.7% upward over the past 60 days. This Zacks Rank #2 (Buy) company’s shares have lost 25.3% over the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Encore Capital Group’s (ECPG - Free Report) earnings estimates for the current year have been revised 5.4% upward over the past 60 days. Over the past six months, this Zacks #2 Ranked company’s shares have gained 1%.
The earnings estimates for GAIN Capital Holdings moved significantly north over the past 60 days for the ongoing year. The company’s shares have rallied 45.3% over the past six months. It carries a Zacks Rank of 2 at present.
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Rising Assets Aid Federated Hermes (FHI) Despite High Costs
On Jun 8, we issued an updated research report on Federated Hermes (FHI - Free Report) . The company’s top-line growth continues to get support from increasing assets under management. Also, focus on global expansion has benefitted it in the past few years. However, escalating expenses on higher compliance-related fees might hinder the company’s bottom-line expansion.
Federated Hermes' earnings estimates for the current year have been revised 4.6% upward to $2.28 over the past 60 days. The company carries a Zacks Rank #3 (Hold) at present.
Shares of Federated Hermes have lost 18.8% so far this year compared with the industry’s 2% decline.
Despite prevailing pressure for money market funds amid stringent regulations, the company has been acquiring money market assets, which enables it to provide various new fund offerings, thus benefiting its clients. Notably, it continues to seek alliances and acquisitions to fortify its business in Europe and the Asia Pacific region as well as in the United States and the rest of the Americas.
Also, Federated Hermes has been gradually reducing waived fees in money market funds to enable certain funds to maintain positive or zero net yields. The pace of such waivers has been declining recently. Notably, there was no waiver in 2019. We believe that such positive impacts will support the company’s top-line performance in the near term.
However, its operating expenses have witnessed a four-year CAGR (2016-2019) of 6.6%, with some annual volatility. Also, given the strictly-regulated nature of the investment management business, compliance-related fees are expected to continue escalating in the near term.
As of Mar 31, 2020, the company holds debt worth $317 million. The debt level has witnessed a rise over the past few quarters and its debt-to-capital ratio (currently 0.23) has also been increasing. Thus, we believe that Federated Hermes carries credit risk, and a higher likelihood of default of interest and debt repayments if the economic situation worsens.
Key Picks
Central Valley Community Bancorp’s 2020 earnings estimates have been revised 28.7% upward over the past 60 days. This Zacks Rank #2 (Buy) company’s shares have lost 25.3% over the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Encore Capital Group’s (ECPG - Free Report) earnings estimates for the current year have been revised 5.4% upward over the past 60 days. Over the past six months, this Zacks #2 Ranked company’s shares have gained 1%.
The earnings estimates for GAIN Capital Holdings moved significantly north over the past 60 days for the ongoing year. The company’s shares have rallied 45.3% over the past six months. It carries a Zacks Rank of 2 at present.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>