Earnings Performance - Federated Hermes reported quarterly earnings of $1 04 per share, beating the Zacks Consensus Estimate of $0 96 per share, representing an 8 33% earnings surprise [1][2] - The company's earnings per share (EPS) increased from $0 96 a year ago, with figures adjusted for non-recurring items [1] - Over the last four quarters, the company has surpassed consensus EPS estimates three times [2] Revenue Performance - Federated Hermes posted revenues of $424 68 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1 19% [3] - This represents an increase from year-ago revenues of $391 5 million [3] - The company has topped consensus revenue estimates three times over the last four quarters [3] Stock Performance and Market Comparison - Federated Hermes shares have lost about 4% since the beginning of the year, compared to the S&P 500's gain of 2 7% [4] - The sustainability of the stock's immediate price movement will depend on management's commentary on the earnings call [4] Earnings Outlook and Estimate Revisions - The current consensus EPS estimate is $0 96 on $421 42 million in revenues for the coming quarter and $4 13 on $1 74 billion in revenues for the current fiscal year [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions [6] - The estimate revisions trend for Federated Hermes is mixed, translating into a Zacks Rank 3 (Hold) [7] Industry Context - Federated Hermes belongs to the Zacks Financial - Investment Management industry, which is currently in the bottom 18% of the 250 plus Zacks industries [9] - The top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [9] Peer Comparison - Janus Henderson Group plc (JHG), another company in the same industry, is expected to report quarterly earnings of $0 96 per share, representing a year-over-year change of +17 1% [10] - Janus Henderson Group plc's revenues are expected to be $690 87 million, up 21 5% from the year-ago quarter [11] - The consensus EPS estimate for Janus Henderson Group plc has been revised 3 4% lower over the last 30 days [10]

Earnings Performance - Q4 2024 earnings per diluted share (EPS) was $1.04, up from $0.96 in Q4 2023, with net income of $84.7 million compared to $82.2 million in the same quarter last year[1] - Full-year 2024 EPS was $3.23, down from $3.40 in 2023, with net income of $268.3 million compared to $299.0 million in 2023[1] - Basic and diluted earnings per share for Q4 2024 were $1.04, an 8% increase from $0.96 in Q4 2023[20] - Full-year 2024 net income decreased by 10% to $268,314,000 compared to $298,980,000 in 2023[21] Revenue and Expenses - Revenue for Q4 2024 increased by $33.2 million or 8%, primarily due to higher average money market and equity assets[8] - Q4 2024 total revenue increased by 8% to $424,683,000 compared to Q4 2023[20] - Investment advisory fees for Q4 2024 rose by 9% to $288,329,000 from $264,693,000 in Q4 2023[20] - Full-year 2024 total revenue was $1,632,093,000, a 1% increase from $1,609,574,000 in 2023[21] - Total operating expenses for Q4 2024 increased by 9% to $314,256,000 compared to $288,927,000 in Q4 2023[20] - Operating expenses increased by $25.3 million or 9% in Q4 2024, mainly due to higher compensation and distribution expenses[9] Assets Management - Total assets under management reached a record $829.6 billion at Dec. 31, 2024, up $72.0 billion or 10% from $757.6 billion at Dec. 31, 2023[2] - Average managed assets for Q4 2024 were $804.4 billion, up $76.4 billion or 10% from $728.0 billion in Q4 2023[2] - Total Managed Assets increased to $829,578 million as of December 31, 2024, up from $757,622 million a year earlier, representing a growth of 9.5%[31] - Total Fund Assets at the end of Q4 2024 were $565,287 million, compared to $507,696 million at the end of Q4 2023, reflecting a year-over-year increase of 11.3%[31] Market Performance - The company experienced net redemptions of $4,386 million in Q4 2024, compared to net redemptions of $415 million in Q3 2024[25] - Market losses in Q4 2024 amounted to $(1,148) million, contrasting with market gains of $9,914 million in Q3 2024[23] - The company reported a market loss of $(1,176) million in Q4 2024, contrasting with a market gain of $5,736 million in Q4 2023[31] Asset Composition - Money market assets were a record $630.3 billion at Dec. 31, 2024, up $70.3 billion or 13% from $560.0 billion at Dec. 31, 2023[7] - Fixed-income assets were $98.1 billion at Dec. 31, 2024, up $3.2 billion or 3% from $94.9 billion at Dec. 31, 2023[5] - Alternative/private markets assets decreased to $18.9 billion at Dec. 31, 2024, down $1.7 billion or 8% from $20.6 billion at Dec. 31, 2023[6] - The equity asset class managed assets totaled $79,423 million at the end of Q4 2024, down from $79,291 million at the end of Q4 2023, a slight decrease of 0.2%[31] - Fixed-income managed assets rose to $98,059 million in Q4 2024, compared to $94,920 million in Q4 2023, reflecting a growth of 3.6%[31] - Cash and other investments as of December 31, 2024, were $641,042,000, up from $560,675,000 in 2023[22] Dividends - The board declared a quarterly dividend of $0.31 per share, payable on Feb. 14, 2025[3] - Dividends declared per share increased to $2.21 in 2024 from $1.11 in 2023[21]

Financial Performance - Q4 2024 diluted EPS was $1.04, up from $0.96 in Q4 2023, with net income of $84.7 million compared to $82.2 million in Q4 2023 [1] - Full-year 2024 EPS was $3.23, down from $3.40 in 2023, with net income of $268.3 million compared to $299.0 million in 2023 [1] - Full-year 2024 results included a $66.3 million non-cash expense related to the impairment of an intangible asset [1] Assets Under Management - Total managed assets reached a record $829.6 billion at Dec 31, 2024, up 10% from $757.6 billion at Dec 31, 2023 [2] - Average managed assets for Q4 2024 were $804.4 billion, up 10% from $728.0 billion in Q4 2023 [2] - Money market assets reached a record $630.3 billion at Dec 31, 2024, up 13% from $560.0 billion at Dec 31, 2023 [7] Revenue and Expenses - Q4 2024 revenue increased 8% to $424.7 million, driven by higher average money market and equity assets [8] - 51% of Q4 2024 revenue came from money market assets, 48% from long-term assets, and 1% from other sources [8] - Operating expenses increased 9% in Q4 2024, primarily due to higher compensation and distribution expenses [9] Asset Class Performance - Equity assets were $79.4 billion at Dec 31, 2024, down 5% from $83.6 billion at Sept 30, 2024 [4] - Fixed-income assets were $98.1 billion at Dec 31, 2024, up 3% from $94.9 billion at Dec 31, 2023 [5] - Alternative/private markets assets were $18.9 billion at Dec 31, 2024, down 8% from $20.6 billion at Dec 31, 2023 [6] Dividend and Share Repurchase - The board declared a quarterly dividend of $0.31 per share, payable on Feb 14, 2025 [3] - In Q4 2024, the company purchased 552,533 shares of Class B common stock for $22.1 million [3] Industry Position - The company ranks in the top 7% of equity fund managers, top 9% of money market fund managers, and top 10% of fixed-income fund managers [20] - The company manages $829.6 billion in assets and serves over 10,000 institutions and intermediaries worldwide [19]

Company Overview - Federated Hermes, Inc. is a global leader in active, responsible investment management with $800.5 billion in assets under management as of September 30, 2024 [4] - The company provides a wide range of investment solutions including equity, fixed-income, alternative/private markets, multi-asset, and liquidity management strategies to over 10,000 institutions and intermediaries worldwide [4] - Federated Hermes serves a diverse client base including corporations, government entities, insurance companies, foundations, endowments, banks, and broker/dealers [4] - The company is headquartered in Pittsburgh and employs more than 2,000 people across various global offices including London, New York, and Boston [4] Upcoming Financial Reporting - Federated Hermes will report its financial and operating results for the quarter and year ended December 31, 2024, after the market closes on January 30, 2025 [1] - A conference call for investors and analysts is scheduled for 9 a.m. Eastern on January 31, 2025, hosted by President and CEO J. Christopher Donahue and CFO Thomas R. Donahue [1] Conference Call Details - Investors can listen to the conference call by dialing 888-506-0062 (domestic) or 973-528-0011 (international) or by visiting FederatedHermes.com for real-time Internet access [2] - A telephone replay of the call will be available starting at approximately 12:30 p.m. Eastern on January 31, 2025, with access codes provided for domestic and international listeners [3] - The online replay will be accessible via FederatedHermes.com for one year [3]

Core Insights - Federated Hermes is experiencing growth in assets under management (AUM) and has a strong liquidity position, but rising expenses pose a near-term concern [1][6] Group 1: Factors Fuelling Federated Hermes - The acquisition of money market assets has led to a 10.5% increase in money market AUM in the first nine months of 2024 compared to the same period in 2023, enhancing the company's fund offerings [2] - The company's average AUM has shown a five-year compound annual growth rate (CAGR) of 11.9% as of 2023, with continued growth in the first nine months of 2024, driven by strategic acquisitions and alliances [3] - As of September 30, 2024, Federated Hermes had long-term debt of $348 million and cash and other investments totaling $565 million, supporting its capital distribution activities, including a 10.7% increase in quarterly dividends to 31 cents per share [4] Group 2: Share Repurchase and Return on Equity - The company has authorized an additional share repurchase program of up to 5 million shares, with 1.24 million shares available under the existing program as of September 30, 2024 [5] - Federated Hermes boasts a trailing 12-month return on equity (ROE) of 29.85%, significantly higher than the industry average of 12.87%, indicating effective utilization of shareholders' funds [5] Group 3: Challenges Facing Federated Hermes - Rising operating expenses have been a concern, with a five-year CAGR of 8.7% from 2018 to 2023, primarily driven by intangible asset-related costs, and this trend has continued into the first nine months of 2024 [6] - Net investment advisory fees accounted for 67.2% of total revenues in the first nine months of 2024, making the company vulnerable to fluctuations in the fair value of securities and redemption levels, which could impact revenues and profitability [7] Group 4: Market Performance - Federated Hermes currently holds a Zacks Rank 1 (Strong Buy), with its shares gaining 25% over the past year, compared to a 39.6% rise in the industry [8]

Core Viewpoint - Federated Hermes is well-positioned to continue its earnings-beat streak, having consistently surpassed earnings estimates in recent quarters [1][3]. Earnings Performance - In the most recent quarter, Federated Hermes reported earnings of $1.06 per share, exceeding the expected $0.92 per share by a surprise of 15.22% [2]. - For the previous quarter, the company reported $0.96 per share against an expectation of $0.89 per share, resulting in a surprise of 7.87% [2]. Earnings Estimates and Predictions - There has been a favorable change in earnings estimates for Federated Hermes, with a positive Earnings ESP of +5.52%, indicating bullish sentiment among analysts regarding the company's earnings prospects [3][6]. - The combination of a positive Earnings ESP and a Zacks Rank of 2 (Buy) suggests a high likelihood of another earnings beat [6]. Statistical Insights - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [4]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [5].

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks, utilizing fundamental analysis and traditional valuation metrics to find undervalued stocks in the market [2] Company Overview: Federated Hermes (FHI) - Federated Hermes currently holds a Zacks Rank of 1 (Strong Buy) and a Value grade of A, indicating strong potential for value investors [4] - The stock has a Forward P/E ratio of 10.12, significantly lower than the industry's average Forward P/E of 17.77, with a 12-month range of 8.42 to 10.48 and a median of 9.56 [4] - FHI's P/B ratio stands at 3.18, compared to the industry's average P/B of 4.04, with a 52-week range of 2.32 to 3.27 and a median of 2.67 [5] - The P/S ratio for FHI is 2.17, which is lower than the industry's average P/S of 3.27, indicating a favorable valuation based on sales [6] - FHI has a P/CF ratio of 9.34, well below the industry's average P/CF of 36.28, with a 12-month range of 7.51 to 9.60 and a median of 8.52 [7] - Overall, the metrics suggest that Federated Hermes is likely undervalued, making it one of the strongest value stocks in the market based on its earnings outlook [8]

Core Viewpoint - Federated Hermes (FHI) is currently viewed as a better value opportunity compared to BlackRock Finance (BLK) based on various valuation metrics and earnings outlook [1][7]. Valuation Metrics - FHI has a forward P/E ratio of 13.50, while BLK has a forward P/E of 24 [5]. - The PEG ratio for FHI is 1.46, indicating a more favorable valuation relative to its expected earnings growth compared to BLK's PEG ratio of 1.85 [5]. - FHI's P/B ratio stands at 3.21, compared to BLK's P/B of 3.82, suggesting that FHI is more undervalued in terms of market value versus book value [6]. Earnings Outlook - FHI is currently experiencing an improving earnings outlook, which contributes to its strong Zacks Rank of 1 (Strong Buy), while BLK holds a Zacks Rank of 2 (Buy) [3][7].

Core Insights - Stocks hitting their 52-week high are perceived as winners and present attractive investment opportunities, but they may also face profit-taking and pullbacks [1][4] - Not all stocks at a 52-week high are overpriced; some may still have significant upside potential [2][5] Investment Strategy - A momentum investing strategy, "buy high, sell higher," can be effective in identifying stocks that may continue to rise despite being at a high price [4] - A screening process is employed to identify 52-week high stocks with strong earnings growth expectations, solid value metrics, and price momentum [7] Screening Criteria - Current Price/52 Week High >= 0.8 indicates stocks trading within 20% of their 52-week high [8] - Positive price changes over the past four weeks and twelve weeks ensure continued upward momentum [9][10] - Valuation metrics such as Price/Sales and P/E ratios are used to identify undervalued stocks compared to industry peers [11][12] - Zacks Rank of 1 (Strong Buy) is included to highlight stocks that have historically outperformed the market [13] - Minimum current price of $8 and a trading volume of at least 100,000 shares are set to ensure liquidity [14][15] Stock Highlights - **Synchrony Financial (SYF)**: Focus on CareCredit platform and strategic acquisitions expected to drive growth; Zacks Consensus Estimate for 2024 earnings increased by 1.6% to $1.52 per share [16][18] - **Federated Hermes (FHI)**: Strategic acquisitions in money market assets support AUM growth; Zacks Consensus Estimate for 2024 earnings increased by 5.7% to $3.15 per share [19][21] - **Norwegian Cruise Line Holdings (NCLH)**: Strong demand and pricing lead to record advance ticket sales; Zacks Consensus Estimate for 2024 earnings increased by 3.1% to $1.64 per share [23][24] - **State Street Corporation (STT)**: Solid business wins and strategic buyouts expected to support fee income; Zacks Consensus Estimate for 2024 earnings increased by 0.5% to $8.42 per share [25][26]

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of ...