Federated Hermes Inc. (FHI Quick QuoteFHI - Free Report) is well-positioned to gain from its steady improvement in assets under management (AUM). Backed by a diverse asset mix and strategic acquisitions, the company continues to expand its market presence. Additionally, its decent liquidity position supports sustainable capital distribution activities, reinforcing shareholder value.

 

Over the last year, shares of FHI have gained 28.4%, outperforming its industry’s growth of 9.7% and close peers, Franklin Resources Inc. (BEN Quick QuoteBEN - Free Report) and Affiliated Managers Group (AMG Quick QuoteAMG - Free Report) . While shares of BEN recorded a decline of 4.1%, AMG rose 10.6% in the same period. 

 

Stable Position in Money Market Sector: Federated continues to strengthen its foothold in the money market business, with assets reaching a record $637.1 billion as of March 31, 2025, up 10.1% year over year. Increased money market AUM is expected to provide new fund offerings, benefiting both institutional and retail clients. Also, strategic acquisitions of money market assets depict the buoyancy of Federated in the money market business.

 

Steady AUM Growth: Federated has recorded a compound annual growth rate (CAGR) of nearly 1% in total AUM through 2027, supported by its diversified investment portfolio. Money market assets remain the dominant driver of AUM expansion, but the firm has also strengthened its fixed-income and equity fund offerings. The firm’s acquisition of C.W. Henderson & Associates in 2022 strengthened its fixed-income portfolio, reinforcing its ability to attract institutional clients. The company continues to seek alliances and acquisitions to expand its business globally. Its inorganic growth efforts are expected to continue to drive the AUM balance in the upcoming period. We project the total AUM to rise marginally in 2025.

 

Strong Balance Sheet Position: Federated maintains a solid financial position, ensuring financial stability and flexibility. As of March 31, 2025, the company’s cash and other investments totaled $541.8 million, while long-term debt remained manageable at $348.2 million. Given this, the company is well-positioned to withstand economic uncertainties while continuing its disciplined growth strategy.

 

Impressive Capital Distribution Plan: Federated has consistently prioritized shareholder returns through dividends and share repurchases. In April 2025, the company raised its quarterly dividend by 9.7% to 34 cents per share. The company has increased its dividend five times in the past five years and currently has a 30% dividend payout ratio. In terms of dividend yield, FHI stands at 3.23%, reflecting a balanced approach to shareholder returns through dividends and capital distributions. Among its peers, BEN has a dividend yield of 5.95%, while AMG has 0.02%.

 

The company also has a share repurchase plan in place. In October 2023, Federated Hermes authorized a share repurchase program of 5 million shares, later expanding the authorization in October 2024 for additional buybacks of 5 million shares, both without expiration. As of March 31, 2025,  2.7 million shares remained available for repurchase, reflecting its continued commitment to capital distribution.

 

Earnings Strength: Federated has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 13.08%. In the last three to five years, the company witnessed earnings per share growth of 5.94%, higher than the industry’s average of 4.54%. For the next three to five years, its earnings are projected to grow 36.4%, significantly higher than the industry’s average of 2.9%.

 

Specifically, FHI’s earnings are projected to grow 36.2% in 2025 and slightly in 2026. Franklin Resources’s estimate for earnings is projected to decline 15.48% in 2025, while it is projected to rise 7.6% in 2026. Affiliated Managers Group earnings are projected to increase 7.16% in 2025 and 12.4% in 2026.

 

 

Also, the Zacks Consensus Estimate for FHI’s 2025 and 2026 earnings has been revised upward over the past seven days, indicating that analysts are optimistic about the stock’s growth potential. 

 

Rising operating expenses are a concern for Federated. Though the metric declined in 2021 and in the first quarter of 2025, it witnessed a four-year (ended 2024) CAGR of 10.9%. Going forward, any expected increase in distribution expenses and new hires might escalate the cost base, which might affect its performance.

 

Nonetheless, the company’s steady AUM growth, decent earnings projections, along with manageable debt levels and sustainable capital distribution activities, are encouraging. Those who own FHI stock should continue holding it for now to generate healthy long-term returns.

 

Federated currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

 

Federated Hermes Inc. (FHI Quick QuoteFHI - Free Report) is well-positioned to gain from its steady improvement in assets under management (AUM). Backed by a diverse asset mix and strategic acquisitions, the company continues to expand its market presence. Additionally, its decent liquidity position supports sustainable capital distribution activities, reinforcing shareholder value.

 

Over the last year, shares of FHI have gained 28.4%, outperforming its industry’s growth of 9.7% and close peers, Franklin Resources Inc. (BEN Quick QuoteBEN - Free Report) and Affiliated Managers Group (AMG Quick QuoteAMG - Free Report) . While shares of BEN recorded a decline of 4.1%, AMG rose 10.6% in the same period. 

 

Factors to Aid FHI’s Performance

 

Stable Position in Money Market Sector: Federated continues to strengthen its foothold in the money market business, with assets reaching a record $637.1 billion as of March 31, 2025, up 10.1% year over year. Increased money market AUM is expected to provide new fund offerings, benefiting both institutional and retail clients. Also, strategic acquisitions of money market assets depict the buoyancy of Federated in the money market business.

 

Steady AUM Growth: Federated has recorded a compound annual growth rate (CAGR) of nearly 1% in total AUM through 2027, supported by its diversified investment portfolio. Money market assets remain the dominant driver of AUM expansion, but the firm has also strengthened its fixed-income and equity fund offerings. The firm’s acquisition of C.W. Henderson & Associates in 2022 strengthened its fixed-income portfolio, reinforcing its ability to attract institutional clients. The company continues to seek alliances and acquisitions to expand its business globally. Its inorganic growth efforts are expected to continue to drive the AUM balance in the upcoming period. We project the total AUM to rise marginally in 2025.

 

Strong Balance Sheet Position: Federated maintains a solid financial position, ensuring financial stability and flexibility. As of March 31, 2025, the company’s cash and other investments totaled $541.8 million, while long-term debt remained manageable at $348.2 million. Given this, the company is well-positioned to withstand economic uncertainties while continuing its disciplined growth strategy.

 

Impressive Capital Distribution Plan: Federated has consistently prioritized shareholder returns through dividends and share repurchases. In April 2025, the company raised its quarterly dividend by 9.7% to 34 cents per share. The company has increased its dividend five times in the past five years and currently has a 30% dividend payout ratio. In terms of dividend yield, FHI stands at 3.23%, reflecting a balanced approach to shareholder returns through dividends and capital distributions. Among its peers, BEN has a dividend yield of 5.95%, while AMG has 0.02%.

 

The company also has a share repurchase plan in place. In October 2023, Federated Hermes authorized a share repurchase program, later expanding the authorization in October 2024 for additional buybacks, both without expiration. As of March 31, 2025,  2.7 million shares remained available for repurchase, reflecting its continued commitment to capital distribution.

 

Earnings Strength: Federated has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 13.08%. In the last three to five years, the company witnessed earnings per share growth of 5.94%, higher than the industry’s average of 4.54%. For the next three to five years, its earnings are projected to grow 36.4%, significantly higher than the industry’s average of 2.9%.

 

Specifically, FHI’s earnings are projected to grow 36.2% in 2025 and slightly in 2026. Franklin Resources’s estimate for earnings is projected to decline 15.48% in 2025, while it is projected to rise 7.6% in 2026. Affiliated Managers Group earnings are projected to increase 7.16% in 2025 and 12.4% in 2026.

 

FHI’s Earnings Estimates

 

Also, the Zacks Consensus Estimate for FHI’s 2025 and 2026 earnings has been revised upward over the past seven days, indicating that analysts are optimistic about the stock’s growth potential. 

 

Estimate Revision Trend

 

Should You Hold FHI Stock?

 

Rising operating expenses are a concern for Federated. Though the metric declined in 2021 and in the first quarter of 2025, it witnessed a four-year (ended 2024) CAGR of 10.9%. Going forward, any expected increase in distribution expenses and new hires might escalate the cost base, which might affect its performance.

 

Nonetheless, the company’s steady AUM growth, decent earnings projections, along with manageable debt levels and sustainable capital distribution activities, are encouraging. Those who own FHI stock should continue holding it for now to generate healthy long-term returns.

 

Federated currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.