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1. Company Snapshot

1.a. Company Description

Federated Hermes, Inc.is a publicly owned asset management holding company.Through its subsidiaries, the firm provides its services to individuals, including high net worth individuals, banking or thrift institutions, investment companies, pension and profit sharing plans, pooled investment vehicles, charitable organizations, state or municipal government entities, and registered investment advisors.


Through its subsidiaries, it manages separate client-focused equity, fixed income, balanced and money market mutual funds along with separate client-focused equity, fixed income, money market, and balanced portfolios.Through its subsidiaries, the firm invests in the public equity and fixed income markets across the globe.It invests in growth and value stocks of small-cap, mid-cap, and large-cap companies.


The firm makes its fixed income investments in ultra-short, short-term, and intermediate-term mortgage-backed, U.S. Government, U.S. corporate, high yield, and municipal securities.It employs both fundamental and quantitative analysis to make its equity investments.Federated Hermes, Inc.


was founded in 1955 and is based in Pittsburgh, Pennsylvania with additional offices in New York City and London, United Kingdom.

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1.b. Last Insights on FHI

Federated Hermes' recent performance was driven by strong Q4 2025 earnings, surpassing consensus forecasts by 14%, thanks to robust money market flows, fixed-cost leverage, and substantial buybacks. The company's MDT-branded quantitative equity strategies are expected to drive top-line expansion of 10% or better in FY2026. Additionally, record AUM, money market strength, and acquisitions have contributed to its growth. Institutional investors, such as Corient Private Wealth LLC and Pacer Advisors Inc., have increased their stakes in the company. A "Buy" rating was reiterated by an analyst, citing favorable prospects.

1.c. Company Highlights

2. Federated Hermes' Strong Q4 Earnings Driven by AUM Growth

Federated Hermes, Inc. (FHI) reported a robust Q4, with revenue increasing 3% driven by higher money market and equity assets. The company's earnings per share (EPS) came in at $1.39, beating estimates of $1.2. Operating expenses rose 2%, mainly due to higher distribution expenses, which increased 25% compared to the prior year. The effective tax rate was 24.4%, and the company expects it to be between 25-28% in 2026. The company's strong financial performance is a testament to its ability to drive growth through its various asset management strategies.

Publication Date: Feb -14

📋 Highlights
  • Record AUM: Federated Hermes reported $903 billion in assets under management (AUM) as of 2025, driven by $3.2 billion growth in equity AUM and $683 billion in money market assets (7% market share).
  • MDT Strategy Performance: MDT equity and market-neutral strategies achieved record $4 billion in net sales (Q4) and $31 billion in gross sales (2025), with MBE strategies hitting $19.1 billion in gross sales (2025).
  • Money Market Growth: Money market AUM reached $683 billion (record high), with Q4 revenue growth tied to higher money market and equity assets, despite fixed income AUM declining by $1.7 billion (Q4).
  • Acquisition and Expansion: The pending FCP acquisition (Q2 2026) will add UK multifamily housing expertise, alongside expansion plans for Hong Kong and tokenization partnerships with Archax, BNY, and Goldman Sachs.

Asset Under Management Growth

The company's assets under management (AUM) reached a record $903 billion at the end of 2025, driven by gains in money market and equity strategies. Equity AUM increased by $3.2 billion, or 3%, in Q4, with net sales of $1.5 billion. The company's money market assets reached a record high of $683 billion, with an estimated 7% market share. Fixed income AUM was $100 billion, down $1.7 billion from the prior quarter, with net redemptions of $2.8 billion.

Valuation Metrics

Using the current valuation metrics, we can see that the company's P/E Ratio is 10.12, P/B Ratio is 3.42, and ROE is 35.33%. These metrics indicate that the company is trading at a reasonable valuation, considering its strong financial performance. The dividend yield is 2.45%, which is attractive for income-seeking investors. With analysts estimating revenue growth at 4.5% next year, the company's valuation multiples may expand, making it an attractive investment opportunity.

Strategic Initiatives

The company is advancing strategic initiatives, including a partnership with Archax, and participating in a collaborative initiative between BNY and Goldman Sachs to explore tokenization opportunities. The company believes that tokenization will be a growth area, driven by demand for instantaneous settlement, collateral purposes, and margining purposes. The acquisition of FCP, expected to close in Q2 2026, will add UK-based multifamily housing expertise, further expanding the company's capabilities.

Outlook

The company's outlook for 2026 is positive, with expectations of one rate cut by 25 basis points, taking the Fed funds target range to 3.25-3.5%. Money market funds are expected to generate yields of 3.2-3.3%. The company's strong track record of developing and managing properties, as well as its expertise in money market funds, positions it well for future growth. With a solid long-term track record and a strong pipeline of new business opportunities, the company is well-positioned for continued success.

3. NewsRoom

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Federated Hermes, Inc. (NYSE:FHI) Receives $55.00 Consensus Price Target from Brokerages

Mar -17

Source: defenseworld.net

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Month-end portfolio data now available for Federated Hermes Premier Municipal Income Fund

Mar -16

Source: prnewswire.com

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Federated Hermes (NYSE:FHI) Sets New 1-Year High – Time to Buy?

Mar -15

Source: defenseworld.net

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Federated Hermes wins 2026 LSEG Lipper Fund Awards for category-leading risk‑adjusted performance

Mar -12

Source: prnewswire.com

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Comparing ONEX (OTCMKTS:ONEXF) and Federated Hermes (NYSE:FHI)

Mar -11

Source: defenseworld.net

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Federated Hermes Premier Municipal Income Fund declares dividend

Mar -10

Source: prnewswire.com

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Federated Hermes, Inc.'s CEO to participate in 2026 RBC Capital Markets Global Financial Institutions Conference

Mar -05

Source: prnewswire.com

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Federated Hermes, Inc. files annual report on Form 10-K with U.S. Securities and Exchange Commission

Feb -27

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.38%)

6. Segments

Federated Hermes Funds

Expected Growth: 3.5%

Federated Hermes Funds' 3.5% growth is driven by increasing demand for ESG investments, strong brand recognition, and a diversified product suite. The fund's active management approach, combined with its expertise in sustainable investing, has attracted environmentally conscious investors. Additionally, the fund's global reach and strategic partnerships have expanded its distribution channels, contributing to its growth.

Separate Accounts

Expected Growth: 2.8%

Strong investment performance, increasing demand for ESG-focused strategies, and expanding distribution channels drive Separate Accounts' 2.8% growth. Federated Hermes' expertise in active management and stewardship, combined with its strong brand reputation, contribute to the segment's growth. Additionally, the increasing adoption of sustainable investing and the need for customized investment solutions also support the segment's expansion.

Other

Expected Growth: 2.2%

Federated Hermes, Inc.'s 2.2% growth in 'Other' segment is driven by increasing demand for alternative investment strategies, expansion of its stewardship and ESG capabilities, and growing adoption of its responsible investment solutions among institutional clients.

7. Detailed Products

Equity Strategies

Federated Hermes offers a range of equity strategies that aim to deliver long-term growth and income to investors. These strategies are designed to meet the diverse needs of investors, from core equity to specialty and thematic approaches.

Fixed Income Strategies

Federated Hermes provides a range of fixed income strategies that aim to deliver income and capital preservation to investors. These strategies include government and corporate bonds, high-yield bonds, and emerging market debt.

Multi-Asset Strategies

Federated Hermes offers multi-asset strategies that combine different asset classes to provide a balanced portfolio. These strategies aim to deliver long-term growth and income while managing risk.

Sustainable and Responsible Investing (SRI)

Federated Hermes offers a range of SRI strategies that aim to deliver long-term growth and income while incorporating environmental, social, and governance (ESG) considerations.

Stewardship Services

Federated Hermes provides stewardship services that aim to promote good governance and sustainable business practices in the companies in which they invest.

ESG Engagement

Federated Hermes offers ESG engagement services that aim to promote sustainable business practices and good governance in the companies in which they invest.

Active Equity ESG

Federated Hermes offers active equity ESG strategies that aim to deliver long-term growth and income while incorporating ESG considerations.

Fixed Income ESG

Federated Hermes offers fixed income ESG strategies that aim to deliver income and capital preservation while incorporating ESG considerations.

8. Federated Hermes, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Federated Hermes, Inc. is medium due to the presence of alternative investment products and services offered by competitors.

Bargaining Power Of Customers

The bargaining power of customers for Federated Hermes, Inc. is low due to the company's strong brand reputation and diversified client base.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Federated Hermes, Inc. is medium due to the company's dependence on a few key suppliers for certain services and technology.

Threat Of New Entrants

The threat of new entrants for Federated Hermes, Inc. is high due to the increasing trend of fintech companies and digital investment platforms entering the market.

Intensity Of Rivalry

The intensity of rivalry for Federated Hermes, Inc. is high due to the highly competitive nature of the investment management industry and the presence of established players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 24.40%
Debt Cost 3.95%
Equity Weight 75.60%
Equity Cost 9.49%
WACC 8.14%
Leverage 32.27%

11. Quality Control: Federated Hermes, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Federated Hermes

A-Score: 7.5/10

Value: 6.0

Growth: 6.6

Quality: 8.5

Yield: 6.0

Momentum: 8.0

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
State Street

A-Score: 6.6/10

Value: 6.7

Growth: 4.7

Quality: 5.6

Yield: 6.0

Momentum: 8.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Victory Capital Holdings

A-Score: 6.3/10

Value: 5.8

Growth: 6.7

Quality: 7.8

Yield: 6.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
FS KKR Capital

A-Score: 6.3/10

Value: 6.2

Growth: 4.6

Quality: 5.8

Yield: 10.0

Momentum: 2.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Prospect Capital

A-Score: 5.5/10

Value: 6.5

Growth: 3.9

Quality: 4.7

Yield: 10.0

Momentum: 0.5

Volatility: 7.7

1-Year Total Return ->

View Full Report
Stock-Card
Cohen & Steers

A-Score: 5.4/10

Value: 4.2

Growth: 3.3

Quality: 8.8

Yield: 7.0

Momentum: 1.5

Volatility: 7.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

56.0$

Current Price

56$

Potential

-0.00%

Expected Cash-Flows