Financial Performance - As of September 30, 2025, Federated Hermes reported a net income attributable to the company of $104.1 million, compared to $87.5 million for the same period in 2024, representing an increase of 19%[83]. - Basic earnings per share for the nine months ended September 30, 2025, was $3.75, up from $2.20 for the same period in 2024, reflecting a 70% increase[83]. - Federated Hermes reported total revenue of $469.4 million for the three months ended September 30, 2025, an increase of 14.9% compared to $408.5 million for the same period in 2024[96]. - The company’s net income for the three months ended September 30, 2025, was $1.969 million, compared to a net loss of $23,000 for the same period in 2024[92]. - For the nine-month period ended September 30, 2025, the income tax provision was $100.5 million, compared to $84.7 million for the same period in 2024[93]. - The effective tax rate for the three-month period ended September 30, 2025, was 24.4%, down from 26.3% for the same period in 2024, primarily due to research and development credits[92]. - Net income increased by $16.6 million for the three-month period and by $112.7 million for the nine-month period ended September 30, 2025, driven by changes in revenues, expenses, and nonoperating income[186][187]. - The effective tax rate decreased to 24.4% for the three-month period and to 24.7% for the nine-month period ended September 30, 2025, compared to 26.3% and 31.5% in the same periods of 2024, respectively[181][182]. Share Repurchase and Dividends - The company repurchased approximately 4.6 million shares of its Class B common stock for $184.7 million during the nine months ended September 30, 2025, with around 6.1 million shares remaining available for repurchase[79]. - The company’s share repurchase programs have no stated expiration date, with the latest authorization allowing for the repurchase of up to 5.0 million shares of Class B common stock[79]. - The board of directors declared a dividend of $0.34 per share to shareholders, payable on November 14, 2025[100]. - The board of directors declared a dividend of $0.34 per share for Class A and Class B common stock shareholders, payable on November 14, 2025[198]. Assets and Investments - As of September 30, 2025, Federated Hermes managed assets totaled $871.2 billion, reflecting its position as a global leader in active investing[102]. - Total managed assets increased by 9% to $871.2 billion as of September 30, 2025, compared to $800.5 billion in 2024[158]. - Long-term assets rose by 5% to $218.4 billion, with equity assets growing by 13% to $94.7 billion and fixed-income assets increasing by 2% to $101.8 billion[158]. - Money market assets grew by 10% to $652.8 billion, up from $593.0 billion in the previous year[158]. - Total fund assets increased by 11% to $607.9 billion, with equity fund assets rising by 19% to $54.1 billion[158]. - Separate account assets rose by 4% to $263.3 billion, with fixed-income separate accounts increasing by 2% to $55.3 billion[158]. - The alternative/private markets segment saw a decline of 8% in long-term assets, dropping to $19.0 billion[158]. - Total Average Managed Assets increased by 8% to $859,491 million for the three months ended September 30, 2025, compared to $793,452 million in 2024[159]. - Average Managed Equity Assets rose by 15% to $92,436 million in Q3 2025 from $80,220 million in Q3 2024[159]. - Fixed-Income Average Managed Assets increased by 2% to $99,206 million for the three months ended September 30, 2025, compared to $97,563 million in 2024[159]. - Total Average Fund Assets grew by 10% to $594,925 million for the three months ended September 30, 2025, compared to $540,253 million in 2024[159]. Regulatory Environment - The SEC's Spring 2025 Regulatory Flexibility Agenda includes 23 short-term agenda items, focusing on deregulation and simplification of disclosure requirements[113]. - There has been a 40% reduction in SEC enforcement actions during the first six months of the new Presidential Administration, with only 56 actions initiated[113]. - The SEC extended the compliance date for amendments to Rule 605 of Regulation NMS from December 14, 2025, to August 1, 2026[114]. - The SEC issued a concept release on potential changes to rules governing Residential Mortgage-Backed Securities (RMBS) to facilitate more public offerings[115]. - The SEC approved proposed rule changes for generic listing standards for exchange-traded products (ETPs) that hold spot commodities, including digital assets[117]. - The SEC's Investment Advisory Committee supports expanded retail access to private markets while emphasizing the need for enhanced investor protections[121]. - Federated Hermes continues to engage with regulators, including meetings with the SEC Chairperson and staff to discuss various regulatory topics[110]. - The company is actively monitoring regulatory developments that may impact its business and financial condition[153]. - Federated Hermes is evaluating the impact of various regulatory changes, including the U.K. Consumer Duty and the EU's T+1 settlement cycle[144][145]. - The company anticipates that compliance with new regulatory requirements may materially affect its expenses and financial condition[154]. Market Performance - Net Sales for Equity Funds reached $1,411 million in Q3 2025, a significant increase from a net redemption of $613 million in Q3 2024[161]. - Fixed-Income Funds experienced net sales of $466 million in Q3 2025, compared to net sales of $305 million in Q3 2024[163]. - Total Long-Term Fund Assets increased to $115,215 million as of September 30, 2025, up from $106,799 million in the same period of 2024, reflecting a growth of approximately 7.5%[170]. - The company reported market gains of $4,414 million for Total Long-Term Fund Assets during the three months ended September 30, 2025, compared to $5,066 million in the same period of 2024[170]. - The impact of foreign exchange on Equity Funds was a loss of $82 million in Q3 2025, contrasting with a gain of $397 million in Q3 2024[161]. - The company recorded net redemptions of $1,166 million in Alternative / Private Markets Funds for the three months ended September 30, 2025, compared to net redemptions of $223 million in the same period of 2024[165]. Operational Metrics - The interest on borrowings from the revolving credit facility is calculated using the Secured Overnight Financing Rate (SOFR), which replaced LIBOR effective July 1, 2023[72]. - The company had no outstanding borrowings under its $350 million revolving credit facility as of September 30, 2025, with an additional $200 million available via an optional increase[74]. - Federated Hermes was in compliance with all financial covenants during the nine-month period ended September 30, 2025[75]. - The interest coverage ratio was 47 to 1 as of September 30, 2025, significantly above the required minimum of 4 to 1[195]. - Cash provided by operating activities totaled $136.1 million for the nine months ended September 30, 2025, a decrease from $219.9 million in the same period of 2024[190]. - Cash used by financing activities was $139.4 million during the nine-month period ended September 30, 2025, primarily due to treasury stock purchases and dividends paid[192]. - Federated Hermes expects to invest approximately $253 million over the next three years for technology-driven initiatives, including $188 million in existing technology-related overhead and $65 million in external spending[197].

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Financial Data and Key Metrics Changes - The company ended Q3 2025 with record assets under management of $871 billion, an increase driven by gains from money market and equity strategies [4] - Total revenue for Q3 increased by $44.6 million or 10% compared to the prior quarter, with contributions from higher money market assets and equity assets [15] - Operating expenses rose by $32.2 million or 10% from the prior quarter, primarily due to higher distribution expenses [15] Business Line Data and Key Metrics Changes - Equity assets increased by $5.7 billion, or 6%, from the prior quarter, despite slightly negative net sales of $130 million [4] - Fixed income assets reached a record high of $101.8 billion, with total net sales improving by $4.1 billion in Q3 [7] - Alternative private markets saw a decrease of about $1.7 billion in assets, mainly due to real estate fund transactions [8] Market Data and Key Metrics Changes - Money market assets increased by $18 billion to reach $653 billion, with money market fund assets rising by 5% to $492.7 billion [12] - The company's estimate of money market mutual fund market share remained at about 7.11% at the end of Q3 [15] Company Strategy and Development Direction - The company is actively developing MDT distribution opportunities outside of the U.S., with strong interest from institutions and intermediaries [5] - The acquisition of FCP, a U.S.-based real estate investment manager, is expected to facilitate entry into the U.S. real estate market [10] - The company is committed to digital asset initiatives, including tokenized money market funds and participation in blockchain technology projects [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the MDT franchise, highlighting a strong pipeline of new RFPs and growing momentum [19] - The institutional pipeline is described as very strong, with over $2 billion expected to fund in the near term [22] - Management anticipates that expenses will rise in line with revenue growth, particularly due to the FCP acquisition and ongoing investments in digital assets [21] Other Important Information - The company paused its open market share repurchase during negotiations with FCP but plans to resume in Q4 [17] - Cash and investments at the end of Q3 were $647 million, with expectations to use a portion for the FCP acquisition [16] Q&A Session Summary Question: MDT franchise growth potential - Management indicated enthusiasm and optimism regarding the MDT franchise, with net sales of about $660 million through October 24 and a strong global pipeline [18][19] Question: Expense trajectory over the next year - Management expects expenses to rise due to the FCP acquisition and ongoing initiatives, but anticipates that these will be accompanied by revenue growth [20][21] Question: Institutional investor allocations and opportunities - The institutional pipeline is strong, with various mandates won across different countries, and about two-thirds expected to fund in Q4 [22][23]

Company Overview - Federated Hermes manages $871.2 billion in assets [12, 14] - The company's total revenue for Q3 2025 was $469.4 million [15] - Federated Hermes has $2.9 billion in financial strength and flexibility [10] - The company manages $652.8 billion in liquidity assets [10, 19] Asset Allocation - Long-term managed assets total $218.4 billion, including $94.7 billion in equity, $101.8 billion in fixed income, and $19.0 billion in alternative/private markets [12] - Liquidity assets make up a significant portion of the AUM, totaling $652.8 billion [19] - U.S Financial Intermediaries account for 68% of total assets under management, U.S Institutional accounts for 25%, and International accounts for 7% [31] Financial Performance - Q3 2025 earnings per share were $1.34 [22] - The company declared a dividend of $0.34 [22] - Total revenue less distribution expense was $356 million in Q3 2025, compared to $159 million in Q3 2013 [27] Asset Growth - Equity assets increased by $5.7 billion, or 6%, from $89.0 billion at 06/30/2025 [22] - Fixed-income assets increased by $3.1 billion, or 3%, from $98.7 billion at 06/30/2025 [24] - Liquidity assets increased by $18.4 billion, or 3%, from $634.4 billion at 06/30/2025 [24]

Core Insights - Federated Hermes reported quarterly earnings of $1.34 per share, exceeding the Zacks Consensus Estimate of $1.11 per share, and up from $1.06 per share a year ago [1] - The earnings surprise was +20.72%, with the company having surpassed consensus EPS estimates in all four of the last quarters [2] - Revenues for the quarter reached $469.45 million, surpassing the Zacks Consensus Estimate by 6.17% and increasing from $408.46 million year-over-year [3] Earnings Performance - The company has consistently outperformed consensus estimates, achieving this in both earnings and revenue over the last four quarters [2][3] - The current consensus EPS estimate for the upcoming quarter is $1.12, with expected revenues of $453.32 million, while the fiscal year estimate is $4.65 on $1.74 billion in revenues [8] Market Position - Federated Hermes shares have increased approximately 16% year-to-date, slightly underperforming the S&P 500's gain of 17.2% [4] - The company holds a Zacks Rank 1 (Strong Buy), indicating expectations for the stock to outperform the market in the near future [7] Industry Context - The Financial - Investment Management industry, to which Federated Hermes belongs, is currently ranked in the top 36% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9] - Another company in the same industry, Affiliated Managers Group, is expected to report earnings soon, with a consensus EPS estimate of $5.83, reflecting a year-over-year increase of +21% [10]

Financial Performance - Federated Hermes reported Q3 2025 earnings per diluted share (EPS) of $1.34, up 26.4% from $1.06 in Q3 2024, with net income of $104.1 million compared to $87.5 million last year[1][2]. - Revenue for Q3 2025 increased by $61.0 million or 15%, primarily due to higher average money market and equity assets[9][12]. - Total revenue for Q3 2025 reached $469,446,000, a 15% increase from $408,456,000 in Q3 2024[24]. - Net income for Q3 2025 was $104,126,000, reflecting a 19% growth compared to $87,538,000 in Q3 2024[24]. - Investment advisory fees, net, increased by 13% to $310,366,000 in Q3 2025 from $274,621,000 in Q3 2024[24]. - For the nine months ended September 30, 2025, total revenue was $1,317,830,000, a 9% increase from $1,207,410,000 in the same period of 2024[25]. - Net income for the nine months ended September 30, 2025, was $296,260,000, a 61% increase from $183,598,000 in the prior year[25]. Assets Under Management - Total assets under management reached a record $871.2 billion as of September 30, 2025, an increase of $70.7 billion or 9% from $800.5 billion a year earlier[2][7]. - Money market assets were a record $652.8 billion, up $59.8 billion or 10% from $593.0 billion at the same time last year[8][9]. - Fixed-income assets also reached a record $101.8 billion, increasing by $1.6 billion or 2% from $100.2 billion at September 30, 2024[5][7]. - Equity assets totaled $94.7 billion, up $11.1 billion or 13% from $83.6 billion a year ago[4][7]. - Alternative/private markets assets decreased to $19.0 billion, down $1.7 billion or 8% from the previous year[6][7]. - Total Managed Assets increased to $871,200 million as of September 30, 2025, up from $800,451 million a year earlier, representing a growth of 8.8%[34]. - Total long-term assets reached $218,433 million, an increase of 5.4% from $207,421 million in the same quarter last year[34]. Expenses - Operating expenses rose by $43.3 million or 15%, mainly due to increased distribution expenses and fluctuations in foreign currency exchange rates[10][12]. - Total operating expenses for Q3 2025 were $339,994,000, up 15% from $296,714,000 in Q3 2024[24]. Dividends - The company declared a dividend of $0.34 per share, payable on November 14, 2025[3][7]. Market Activity - Total sales for the quarter amounted to $15,105 million, compared to $14,054 million in the previous quarter, showing an increase of 7.5%[27]. - Total redemptions for the quarter were $15,245 million, slightly higher than $14,520 million in the previous quarter, reflecting an increase of 5.0%[27]. - Market gains for the quarter were $7,729 million, compared to $6,657 million in the previous quarter, representing a growth of 16.1%[27]. - Net sales (redemptions) for the quarter were a loss of $140 million, compared to a loss of $466 million in the previous quarter, indicating an improvement[27]. - The company reported a total of $43,663 million in sales for the nine months ended September 30, 2025, significantly up from $32,613 million in the same period last year, reflecting a year-over-year increase of 33.5%[27]. Equity and Liabilities - Total assets as of September 30, 2025, amounted to $2,182,270,000, compared to $2,084,684,000 at the end of 2024[26]. - Current liabilities decreased to $256,400,000 as of September 30, 2025, from $289,193,000 at the end of 2024[26]. - Equity excluding treasury stock increased to $1,993,883,000 as of September 30, 2025, from $1,728,044,000 at the end of 2024[26].

Financial Performance - Federated Hermes reported earnings per diluted share (EPS) of $1.34 for Q3 2025, an increase from $1.06 in Q3 2024, with net income rising to $104.1 million from $87.5 million year-over-year [1][21]. - Revenue for Q3 2025 increased by $61.0 million or 15% compared to Q3 2024, primarily due to higher average money market and equity assets [8][11]. - Operating expenses rose by $43.3 million or 15% in Q3 2025, driven by increased distribution expenses and fluctuations in foreign currency exchange rates [9][11]. Asset Management - Total managed assets reached a record $871.2 billion as of September 30, 2025, up $70.7 billion or 9% from $800.5 billion a year earlier [2][16]. - Money market assets also hit a record of $652.8 billion, increasing by $59.8 billion or 10% from $593.0 billion year-over-year [7][16]. - Equity assets grew to $94.7 billion, up $11.1 billion or 13% from the previous year, while fixed-income assets reached a record $101.8 billion, up $1.6 billion or 2% [4][5][16]. Fund Performance - The company experienced record net sales of equity funds in Q3 2025, with strong interest in its MDT equity and alternative quantitative investment offerings [3][16]. - Top-selling equity funds included the Federated Hermes MDT Mid Cap Growth Fund and the Federated Hermes MDT Large Cap Growth Fund [4]. - Fixed-income funds that performed well included the Federated Hermes Ultrashort Bond Fund and the Federated Hermes Sustainable Global Investment Grade Credit Fund [5]. Dividends and Shareholder Returns - The board of directors declared a dividend of $0.34 per share, payable on November 14, 2025, to shareholders of record as of November 7, 2025 [3][21]. - The company repurchased 20,808 shares of its class B common stock during Q3 2025 due to employee restricted stock forfeitures [3].

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Core Viewpoint - The article compares Federated Hermes (FHI) and SEI Investments (SEIC) to determine which stock is more attractive to value investors [1] Group 1: Zacks Rank and Earnings Outlook - FHI has a Zacks Rank of 1 (Strong Buy), while SEIC has a Zacks Rank of 3 (Hold), indicating a stronger earnings outlook for FHI [3] - The Zacks Rank emphasizes stocks with positive revisions to earnings estimates, suggesting an improving earnings outlook for FHI [3] Group 2: Valuation Metrics - FHI has a forward P/E ratio of 10.35, compared to SEIC's forward P/E of 14.82, indicating that FHI may be undervalued [5] - FHI's PEG ratio is 0.53, while SEIC's PEG ratio is 1.23, further suggesting that FHI is a better value option when considering expected earnings growth [5] - FHI's P/B ratio is 3.35, whereas SEIC's P/B ratio is 4.22, reinforcing the notion that FHI is more attractively priced [6] Group 3: Value Grades - FHI has earned a Value grade of B, while SEIC has a Value grade of C, indicating that FHI is viewed as a superior value investment based on various valuation metrics [6]

Core Viewpoint - Federated Hermes (FHI) has experienced a downtrend with a 7.4% decline over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround as analysts expect better earnings than previously predicted [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements, with a reading below 30 indicating that a stock is considered oversold [2]. - FHI's current RSI reading is 29.21, indicating that the heavy selling pressure may be exhausting itself, which could lead to a reversal in the stock's trend [5]. Group 2: Fundamental Analysis - There is strong consensus among sell-side analysts regarding an increase in earnings estimates for FHI, with a 1.4% rise in the consensus EPS estimate over the last 30 days, which typically correlates with price appreciation [7]. - FHI holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a near-term turnaround [8].