We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
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 Hits 52-Week High: Should You Buy the Stock Now?
Read MoreHide Full Article
Key Takeaways
FHI touched a 52-week high of $44.50, rising 35.2% over the past year and outperforming its industry peers.
AUM rose 7.8% year over year in Q1 2025 to $839.8B, driven by liquidity strategies and diverse asset growth.
Money market assets hit $637.1B in Q1, rising 10.1% year over year and supporting new client fund offerings.
Federated Hermes, Inc. (FHI - Free Report) shares touched a new 52-week high of $44.50 on Friday before closing the session slightly lower at $44.25. Over the past year, FHI shares have risen 35.1%, surpassing both its industry and close peers, Affiliated Managers Group (AMG - Free Report) and T. Rowe Price Group (TROW - Free Report) .
One Year Price Performance
Image Source: Zacks Investment Research
What’s Fueling FHI's Momentum?
Solid Assets Under Management (AUM) Balance: Federated Hermes has displayed consistent growth in assets under management over the years. Over the four years ending 2024, AUM witnessed a compound annual growth rate (CAGR) of 7.4%. In the first quarter of 2025, the company’s AUM increased 7.8% from the prior-year quarter. The company’s diverse asset base and momentum in liquidity-driven strategies are expected to continue supporting its AUM growth.
Strength in Money Market Sector: The company has maintained a strong position in the money market space. In the first quarter of 2025, money market assets grew 10.1% year over year to a record level of $637.1 billion. Increased money market AUM will provide the company with various new fund offerings that would benefit its clients. Moving forward, management expects the market conditions for money market strategies to remain favorable, with money market fund yields continuing to offer an attractive alternative to direct market instruments and bank deposit rates.
Strategic Business Expansion: Federated Hermes has expanded its operations through key acquisitions. In 2022, it acquired C.W. Henderson & Associates to strengthen its separately managed accounts business. In 2021, the company acquired investment management-related assets of Horizon Advisers. In the same year, it acquired the remaining 29.5% interest in Hermes Fund Managers Limited from BT Pension Scheme. While no recent deals have been announced, these moves have continued to support AUM growth and product diversification.
Solid Balance Sheet Position: The company maintains a strong financial position. As of March 31, 2025, the company held $541.8 million in cash and $348.2 million in long-term debt. With manageable debt levels and ample liquidity, the firm is well-positioned to meet its obligations, even in the face of potential economic uncertainty.
Impressive Capital Distribution Activities: The company continues to reward shareholders while maintaining balance sheet strength. In October 2023, the board of directors authorized a share repurchase program with no expiration date that allows the repurchase of up to 5 million shares of common stock. In October 2024, an additional share repurchase program of up to 5 million shares of common stock was authorized. As of March 31, 2025, 2.7 million shares were available under the share repurchase program.
Apart from the share repurchase program, the company pays regular dividends. In April 2025, FHI raised its quarterly dividend by 9.7% to 34 cents per share. In the last five years, the company increased its dividend five times while having a dividend payout rate of 30%. The company has a current dividend yield of 3.1%. In comparison, the dividend yield of Affiliated Managers and T. Rowe Price are 0.02% and 5.3%, respectively.
Few Headwinds Prevail for FHI Stock
Elevated Expense Base: The rising costs remain a key concern for FHI. From 2020 to 2024, total operating expenses witness a CAGR of 10.9%, largely driven by intangible asset-related costs and higher staffing costs. While expenses fell slightly in the first quarter of 2025, ongoing distribution and compensation costs will keep the expense base elevated.
Revenue Concentration: The company earns a large portion of its income from investment advisory fees. As of March 31, 2025, these fees made up 67.9% of its total revenues. Significant fluctuations in the fair value of securities held by, or the level of redemptions from, the funds or other products advised by the company may materially affect the amount of managed assets. This will, thus, pose a hindrance to the company’s revenues and profitability.
FHI's Estimates and Valuation Analysis
The consensus mark for FHI’s 2025 and 2026 sales suggests a year-over-year increase of 4.8% and 3.1%, respectively. Similarly, the consensus estimate for earnings indicates a 33.1% and 0.9% rise for 2025 and 2026, respectively.
Over the past week, the Zacks Consensus Estimate for earnings for 2025 and 2026 has been revised upward.
Estimates Revision Trend
Image Source: Zacks Investment Research
In terms of valuation, FHI stock appears inexpensive relative to the industry. The company is currently trading at a 12-month trailing price-to-earnings P/E ratio of 10.25X, lower than the industry’s 17.49X.
Price-to-Earnings F12 M
Image Source: Zacks Investment Research
Meanwhile, Affiliated Managers holds a P/E ratio of 8.09X, while T. Rowe Price’s P/E ratio stands at 11.43X.
Does FHI Stock Deserve a Place in Your Portfolio?
FHI’s rising costs and revenue concentration remains a near-term concern. However, Federated’s steady rise in AUM balance driven by its rising money market funds, along with balance sheet strength, is likely to support its financials in the long term. Also, its capital distribution activities seem sustainable, given its decent liquidity position.
Given its strong fundamentals and favorable valuations, FHI stock looks like an attractive investment pick now.
Image: Shutterstock
Federated Hermes Hits 52-Week High: Should You Buy the Stock Now?
Key Takeaways
Federated Hermes, Inc. (FHI - Free Report) shares touched a new 52-week high of $44.50 on Friday before closing the session slightly lower at $44.25. Over the past year, FHI shares have risen 35.1%, surpassing both its industry and close peers, Affiliated Managers Group (AMG - Free Report) and T. Rowe Price Group (TROW - Free Report) .
One Year Price Performance
Image Source: Zacks Investment Research
What’s Fueling FHI's Momentum?
Solid Assets Under Management (AUM) Balance: Federated Hermes has displayed consistent growth in assets under management over the years. Over the four years ending 2024, AUM witnessed a compound annual growth rate (CAGR) of 7.4%. In the first quarter of 2025, the company’s AUM increased 7.8% from the prior-year quarter. The company’s diverse asset base and momentum in liquidity-driven strategies are expected to continue supporting its AUM growth.
Strength in Money Market Sector: The company has maintained a strong position in the money market space. In the first quarter of 2025, money market assets grew 10.1% year over year to a record level of $637.1 billion. Increased money market AUM will provide the company with various new fund offerings that would benefit its clients. Moving forward, management expects the market conditions for money market strategies to remain favorable, with money market fund yields continuing to offer an attractive alternative to direct market instruments and bank deposit rates.
Strategic Business Expansion: Federated Hermes has expanded its operations through key acquisitions. In 2022, it acquired C.W. Henderson & Associates to strengthen its separately managed accounts business. In 2021, the company acquired investment management-related assets of Horizon Advisers. In the same year, it acquired the remaining 29.5% interest in Hermes Fund Managers Limited from BT Pension Scheme. While no recent deals have been announced, these moves have continued to support AUM growth and product diversification.
Solid Balance Sheet Position: The company maintains a strong financial position. As of March 31, 2025, the company held $541.8 million in cash and $348.2 million in long-term debt. With manageable debt levels and ample liquidity, the firm is well-positioned to meet its obligations, even in the face of potential economic uncertainty.
Impressive Capital Distribution Activities: The company continues to reward shareholders while maintaining balance sheet strength. In October 2023, the board of directors authorized a share repurchase program with no expiration date that allows the repurchase of up to 5 million shares of common stock. In October 2024, an additional share repurchase program of up to 5 million shares of common stock was authorized. As of March 31, 2025, 2.7 million shares were available under the share repurchase program.
Apart from the share repurchase program, the company pays regular dividends. In April 2025, FHI raised its quarterly dividend by 9.7% to 34 cents per share. In the last five years, the company increased its dividend five times while having a dividend payout rate of 30%. The company has a current dividend yield of 3.1%. In comparison, the dividend yield of Affiliated Managers and T. Rowe Price are 0.02% and 5.3%, respectively.
Few Headwinds Prevail for FHI Stock
Elevated Expense Base: The rising costs remain a key concern for FHI. From 2020 to 2024, total operating expenses witness a CAGR of 10.9%, largely driven by intangible asset-related costs and higher staffing costs. While expenses fell slightly in the first quarter of 2025, ongoing distribution and compensation costs will keep the expense base elevated.
Revenue Concentration: The company earns a large portion of its income from investment advisory fees. As of March 31, 2025, these fees made up 67.9% of its total revenues. Significant fluctuations in the fair value of securities held by, or the level of redemptions from, the funds or other products advised by the company may materially affect the amount of managed assets. This will, thus, pose a hindrance to the company’s revenues and profitability.
FHI's Estimates and Valuation Analysis
The consensus mark for FHI’s 2025 and 2026 sales suggests a year-over-year increase of 4.8% and 3.1%, respectively. Similarly, the consensus estimate for earnings indicates a 33.1% and 0.9% rise for 2025 and 2026, respectively.
Over the past week, the Zacks Consensus Estimate for earnings for 2025 and 2026 has been revised upward.
Estimates Revision Trend
Image Source: Zacks Investment Research
In terms of valuation, FHI stock appears inexpensive relative to the industry. The company is currently trading at a 12-month trailing price-to-earnings P/E ratio of 10.25X, lower than the industry’s 17.49X.
Price-to-Earnings F12 M
Image Source: Zacks Investment Research
Meanwhile, Affiliated Managers holds a P/E ratio of 8.09X, while T. Rowe Price’s P/E ratio stands at 11.43X.
Does FHI Stock Deserve a Place in Your Portfolio?
FHI’s rising costs and revenue concentration remains a near-term concern. However, Federated’s steady rise in AUM balance driven by its rising money market funds, along with balance sheet strength, is likely to support its financials in the long term. Also, its capital distribution activities seem sustainable, given its decent liquidity position.
Given its strong fundamentals and favorable valuations, FHI stock looks like an attractive investment pick now.
At present, FHI carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.