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Federated Hermes, Inc.’s (FHI - Free Report) first-quarter 2024 earnings per share of 89 cents met the Zacks Consensus Estimate. The bottom line increased from 78 cents in the year-ago quarter.
An increase in net investment advisory fees and net administrative service fees are the major driving factors. However, higher expense levels were headwinds.
Net income was $75 million, up 8% from the year-ago quarter.
Revenues Improve, Operating Expenses Rise
Total revenues improved 4% year over year to $396.4 million. The top line surpassed the Zacks Consensus Estimate of $324.9 million. The rise was driven by an increase in net investment advisory fees and net administrative service fees.
Quarterly net investment advisory fees grew marginally to $264.3 million. While net other service fees decreased 4% to $37.3 million, net administrative service fees jumped 20% to $94.8 million.
Total operating expenses increased marginally year over year to $297.8 million. Our expectation for the metric was $303.3 million.
Federated Hermes recorded a net non-operating income of $5.4 million compared with $7.3 million in the prior-year quarter.
As of Mar 31, 2024, cash and other investments, and total long-term debt were $558.5 million and $347.9 million compared with $560.7 million and $347.8 million, respectively, as of Dec 31, 2023.
Asset Position Increase
As of Mar 31, 2024, total managed assets were $778.7 billion, up 2.8% sequentially. FHI witnessed money-market assets of $578.8 billion, up 3.4% year over year. Fixed-income assets increased 1.5% to $96.3 billion.
Equity assets of $80.1 billion increased 1% from the prior-year quarter. Moreover, alternative/private market assets decreased marginally $20.4 billion. Our expectations for money-market assets, fixed-income assets, equity assets and alternative/private market assets were $527.4 billion, $90.4 billion, $81.3 billion and $21 billion, respectively.
Average managed assets totaled $776.5 billion, up 6.7% year over year.
Capital Distribution Update
The company declared a quarterly cash dividend of 31 cents per share, which will be paid out on May 15, 2024, to shareholders of record as of May 8. It indicates a sequential increase of 10.7%. The company will also pay out a special dividend of $1 per share.
The company repurchased 1,082,120 shares of its class B common stock for $37 million in the reported quarter.
Our Viewpoint
Federated Hermes displays substantial growth potential, supported by its diverse asset and product mix, and a solid liquidity position. Though uncertain markets pose concerns, a solid asset under management balance will likely aid its financials.
Federated Hermes, Inc. Price, Consensus and EPS Surprise
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2024 adjusted earnings of $9.81 per share handily surpassed the Zacks Consensus Estimate of $9.42. The figure reflects a jump of 24% from the year-ago quarter.
BLK’s results benefited from a rise in revenues and higher non-operating income. Further, the AUM balance witnessed an improvement, driven by net inflows. However, higher expenses acted as a dampener.
Invesco’s (IVZ - Free Report) first-quarter 2024 adjusted earnings of 33 cents per share lagged the Zacks Consensus Estimate of 40 cents. The bottom line declined 13.2% from the prior-year quarter.
IVZ’s results were primarily hurt by a decline in adjusted revenues, along with higher adjusted expenses. However, an increase in the AUM balance on decent inflows was a positive.
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Federated Hermes (FHI) Q1 Earnings Meet, Expenses Rise Y/Y
Federated Hermes, Inc.’s (FHI - Free Report) first-quarter 2024 earnings per share of 89 cents met the Zacks Consensus Estimate. The bottom line increased from 78 cents in the year-ago quarter.
An increase in net investment advisory fees and net administrative service fees are the major driving factors. However, higher expense levels were headwinds.
Net income was $75 million, up 8% from the year-ago quarter.
Revenues Improve, Operating Expenses Rise
Total revenues improved 4% year over year to $396.4 million. The top line surpassed the Zacks Consensus Estimate of $324.9 million. The rise was driven by an increase in net investment advisory fees and net administrative service fees.
Quarterly net investment advisory fees grew marginally to $264.3 million. While net other service fees decreased 4% to $37.3 million, net administrative service fees jumped 20% to $94.8 million.
Total operating expenses increased marginally year over year to $297.8 million. Our expectation for the metric was $303.3 million.
Federated Hermes recorded a net non-operating income of $5.4 million compared with $7.3 million in the prior-year quarter.
As of Mar 31, 2024, cash and other investments, and total long-term debt were $558.5 million and $347.9 million compared with $560.7 million and $347.8 million, respectively, as of Dec 31, 2023.
Asset Position Increase
As of Mar 31, 2024, total managed assets were $778.7 billion, up 2.8% sequentially. FHI witnessed money-market assets of $578.8 billion, up 3.4% year over year. Fixed-income assets increased 1.5% to $96.3 billion.
Equity assets of $80.1 billion increased 1% from the prior-year quarter. Moreover, alternative/private market assets decreased marginally $20.4 billion. Our expectations for money-market assets, fixed-income assets, equity assets and alternative/private market assets were $527.4 billion, $90.4 billion, $81.3 billion and $21 billion, respectively.
Average managed assets totaled $776.5 billion, up 6.7% year over year.
Capital Distribution Update
The company declared a quarterly cash dividend of 31 cents per share, which will be paid out on May 15, 2024, to shareholders of record as of May 8. It indicates a sequential increase of 10.7%. The company will also pay out a special dividend of $1 per share.
The company repurchased 1,082,120 shares of its class B common stock for $37 million in the reported quarter.
Our Viewpoint
Federated Hermes displays substantial growth potential, supported by its diverse asset and product mix, and a solid liquidity position. Though uncertain markets pose concerns, a solid asset under management 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, the company 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) first-quarter 2024 adjusted earnings of $9.81 per share handily surpassed the Zacks Consensus Estimate of $9.42. The figure reflects a jump of 24% from the year-ago quarter.
BLK’s results benefited from a rise in revenues and higher non-operating income. Further, the AUM balance witnessed an improvement, driven by net inflows. However, higher expenses acted as a dampener.
Invesco’s (IVZ - Free Report) first-quarter 2024 adjusted earnings of 33 cents per share lagged the Zacks Consensus Estimate of 40 cents. The bottom line declined 13.2% from the prior-year quarter.
IVZ’s results were primarily hurt by a decline in adjusted revenues, along with higher adjusted expenses. However, an increase in the AUM balance on decent inflows was a positive.