Federated Hermes, Inc. (FHI)
Valuation Overview•Is Federated Hermes, Inc. Overvalued or Undervalued?
Commands a peer premium multiple, but this multiple is justified by a strong intrinsic cash flow value.
High-quality fundamentals with a strong composite quality score of 82/100, backed by robust profitability and solvency.
Wall Street forecasts a balanced outlook with consensus price targets near the current price.
Verdict: High-quality compounder, with growth as the only relative weakness.
Wall Street sentiment is generally neutral. This outlook is strongly supported by highly attractive capital returns, driven by a balanced mix of reliable dividends and share buybacks.
FHI exhibits elite business quality, driven by exceptional capital efficiency and highly lucrative margins (highlighted by a massive 24.1% ROIC). This is backed by a fortress balance sheet, holding significant net cash ($127M) and minimal debt risk.
The company maintains stable top-line performance paired with highly explosive earnings growth (24.6% EPS 3Y CAGR). This growth is supported by elite operational efficiency, sustaining an impressive 27.4% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $479.0M | +11.0% | — | — | +6.9% | |
| EBITDA | $126.3M | — | +15.2% | — | — | |
| Net Income | $95.9M | +50.3% | +19.0% | — | +9.0% | |
| EPS (Diluted) | $1.27 | +58.8% | +24.6% | +9.7% | +12.2% | |
| Free Cash Flow | $28.8M | -14.0% | -2.7% | -3.9% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 51.5% | 68.5% | 65.8% | 67.8% |
| Operating Margin | 27.4% | 25.3% | 25.4% | 27.2% |
| Net Margin | 21.4% | 19.1% | 18.9% | 20.2% |
| FCF Margin | 16.5% | 18.7% | 18.1% | 20.1% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $1.20 | $1.27 | +5.8% | ||
| Q1'26 | $1.20 | $1.39 | +15.8% | ||
| Q4'25 | $1.13 | $1.34 | +18.6% | ||
| Q3'25 | $0.99 | $1.16 | +17.2% | ||
| Q2'25 | $0.91 | $1.10 | +20.9% | ||
| Q1'25 | $0.96 | $1.04 | +8.3% | ||
| Q4'24 | $0.92 | $1.06 | +15.2% | ||
| Q3'24 | $0.89 | $0.96 | +7.9% |
Total return is +43.1% (1Y), outperforming the benchmark by +18.1%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +14.2% | +4.9% | — |
| 1Y | +43.1% | +18.1% | +3.3% |
| 3YCAGR | +19.2% | -0.2% | +12.8% |
| 5YCAGR | +15.1% | +2.2% | +21.3% |
| 10YCAGR | +9.3% | -4.2% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Federated Hermes, Inc. (FHI) valuation, health, and returns.
Federated Hermes, Inc. is estimated to be undervalued under our discounted cash flow framework. relative multiples indicate the stock is Slightly expensive versus peers compared to industry peers. undervalued (implying +47.7% upside to DCF intrinsic value of $87.22)
Federated Hermes, Inc. has multiple valuation anchors: DCF Intrinsic Value: $87.22 | Peer Relative Fair Value: $48.16 | Wall Street Analyst Target: $57.50 (implying -2.7% upside). A convergence of these signals offers higher conviction.
Federated Hermes, Inc. displays excellent financial health with a composite quality score of 82/100, supported by a Piotroski F-Score of 8/9, Return on Invested Capital (ROIC) of 24.1%.
Federated Hermes, Inc. pays a 2.4% dividend yield, covered by a 26% payout ratio with 3 years of growth, supplemented by a 5.9% buyback yield.
Federated Hermes, Inc.'s current growth trajectory is Decelerating. The company achieved +11.0% 1Y revenue growth and +58.8% 1Y EPS growth, compared to its 3Y revenue CAGR of N/A.
Wall Street consensus is Hold based on 21 analysts, beating EPS expectations in 92% of recent quarters with a 11-quarter streak. The consensus price target represents a -2.7% change from current levels.
Investment risks for Federated Hermes, Inc. include: -12.6% 1-year max drawdown. Volatility risk is characterized by a beta of 0.70x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.