We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Federated Hermes (FHI) Up 8.1% on Q3 Earnings & Revenue Beat
Read MoreHide Full Article
Shares of Federated Hermes, Inc. (FHI - Free Report) have gained 8.1% since the release of its third-quarter 2022 results late last week. Earnings per share of 78 cents (including the impact of net realized and unrealized losses on investments) handily outpaced the Zacks Consensus Estimate of 69 cents. In the same period last year, the company reported earnings per share of 73 cents.
Excluding the impact of net realized and unrealized losses on investments, earnings were 82 cents per share.
An increase in net investment advisory fees was the major driving factor. Yet, reduced net administrative service fees, elevated expense level and lower assets balance acted as headwinds.
Net income was $69.5 million, down 3% from the year-ago quarter.
Revenues Rise, Operating Expenses Surge
Total revenues improved 17% year over year to $381.1 million. Also, the top line beat the Zacks Consensus Estimate of $374 million. The rise was mainly driven by a decrease in voluntary fee waivers.
Net investment advisory fees grew 15% to $263.6 million. Net other service fees surged substantially to $42.5 million. However, net administrative service fees fell 2% to $75 million.
In the reported quarter, Federated Hermes derived 45% of its total revenues from money market assets, 33% from equity, 13% from fixed-income assets, 8% from alternative/private markets and multi-asset, and the remaining 1% from sources other than managed assets.
Total operating expenses jumped 25% to $284.4 million. The rise resulted primarily from significantly higher distribution and travel and related expenses.
Federated Hermes recorded net non-operating expenses of $7.6 million compared with $1.8 million in the prior-year quarter.
As of Sep 30, 2022, cash and other investments were $481.2 million, and total long-term debt was $397.5 million compared with $426.7 million and $223.4 million, respectively, as of Dec 31, 2021.
Asset Position Deteriorates
As of Sep 30, 2022, total managed assets were $624.4 billion, down 1.5% year over year.
Federated Hermes witnessed money-market assets of $441.3 billion, up 6.7%. However, fixed-income assets declined 12.2% to $85.4 billion. Equity assets of $74.7 billion plunged 23.3%. In addition, alternative/private market assets decreased 8.5% to $20.2 billion.
Average managed assets totaled $631.8 billion, down marginally year over year.
Share Repurchase Update
The company purchased 0.21 million shares of its class B common stock for $6.9 million in the reported quarter.
Our Viewpoint
Federated Hermes displays substantial growth potential, supported by its diverse asset and product mix, as well as a solid liquidity position. Acquisitions are also anticipated to be beneficial for FHI. Though uncertain markets and mounting costs pose a concern, a solid AUM balance will likely aid its financials.
Federated Hermes, Inc. Price, Consensus and EPS Surprise
BlackRock, Inc.’s (BLK - Free Report) third-quarter 2022 adjusted earnings of $9.55 per share surpassed the Zacks Consensus Estimate of $7.93. The figure reflects a decrease of 15.8% from the year-ago quarter.
Results benefited from a decline in expenses. However, lower revenues and assets under management (AUM) balance were the major headwinds for BLK.
Invesco’s (IVZ - Free Report) third-quarter 2022 adjusted earnings of 34 cents per share missed the Zacks Consensus Estimate of 43 cents by a significant margin. The bottom line plunged 55.8% from the prior-year quarter. Our estimate for earnings was 49 cents.
Results were adversely impacted by lower AUM balance and long-term outflows, which hurt revenues. However, a decline in operating expenses was a tailwind for Invesco.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Federated Hermes (FHI) Up 8.1% on Q3 Earnings & Revenue Beat
Shares of Federated Hermes, Inc. (FHI - Free Report) have gained 8.1% since the release of its third-quarter 2022 results late last week. Earnings per share of 78 cents (including the impact of net realized and unrealized losses on investments) handily outpaced the Zacks Consensus Estimate of 69 cents. In the same period last year, the company reported earnings per share of 73 cents.
Excluding the impact of net realized and unrealized losses on investments, earnings were 82 cents per share.
An increase in net investment advisory fees was the major driving factor. Yet, reduced net administrative service fees, elevated expense level and lower assets balance acted as headwinds.
Net income was $69.5 million, down 3% from the year-ago quarter.
Revenues Rise, Operating Expenses Surge
Total revenues improved 17% year over year to $381.1 million. Also, the top line beat the Zacks Consensus Estimate of $374 million. The rise was mainly driven by a decrease in voluntary fee waivers.
Net investment advisory fees grew 15% to $263.6 million. Net other service fees surged substantially to $42.5 million. However, net administrative service fees fell 2% to $75 million.
In the reported quarter, Federated Hermes derived 45% of its total revenues from money market assets, 33% from equity, 13% from fixed-income assets, 8% from alternative/private markets and multi-asset, and the remaining 1% from sources other than managed assets.
Total operating expenses jumped 25% to $284.4 million. The rise resulted primarily from significantly higher distribution and travel and related expenses.
Federated Hermes recorded net non-operating expenses of $7.6 million compared with $1.8 million in the prior-year quarter.
As of Sep 30, 2022, cash and other investments were $481.2 million, and total long-term debt was $397.5 million compared with $426.7 million and $223.4 million, respectively, as of Dec 31, 2021.
Asset Position Deteriorates
As of Sep 30, 2022, total managed assets were $624.4 billion, down 1.5% year over year.
Federated Hermes witnessed money-market assets of $441.3 billion, up 6.7%. However, fixed-income assets declined 12.2% to $85.4 billion. Equity assets of $74.7 billion plunged 23.3%. In addition, alternative/private market assets decreased 8.5% to $20.2 billion.
Average managed assets totaled $631.8 billion, down marginally year over year.
Share Repurchase Update
The company purchased 0.21 million shares of its class B common stock for $6.9 million in the reported quarter.
Our Viewpoint
Federated Hermes displays substantial growth potential, supported by its diverse asset and product mix, as well as a solid liquidity position. Acquisitions are also anticipated to be beneficial for FHI. Though uncertain markets and mounting costs pose a concern, a solid AUM balance will likely aid its financials.
Federated Hermes, Inc. Price, Consensus and EPS Surprise
Federated Hermes, Inc. price-consensus-eps-surprise-chart | Federated Hermes, Inc. Quote
Currently, Federated Hermes carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
BlackRock, Inc.’s (BLK - Free Report) third-quarter 2022 adjusted earnings of $9.55 per share surpassed the Zacks Consensus Estimate of $7.93. The figure reflects a decrease of 15.8% from the year-ago quarter.
Results benefited from a decline in expenses. However, lower revenues and assets under management (AUM) balance were the major headwinds for BLK.
Invesco’s (IVZ - Free Report) third-quarter 2022 adjusted earnings of 34 cents per share missed the Zacks Consensus Estimate of 43 cents by a significant margin. The bottom line plunged 55.8% from the prior-year quarter. Our estimate for earnings was 49 cents.
Results were adversely impacted by lower AUM balance and long-term outflows, which hurt revenues. However, a decline in operating expenses was a tailwind for Invesco.