Federated(US:FHI) ZACKSยท2025-05-27 19:41Core Viewpoint - Federated Hermes Inc. is well-positioned for growth due to steady improvement in assets under management (AUM), strategic acquisitions, and a strong liquidity position that supports sustainable capital distribution activities, enhancing shareholder value [1][4][6]. Performance Summary - Over the past year, shares of Federated Hermes (FHI) have increased by 28.4%, outperforming the industry growth of 9.7% and close peers [2]. - The company has a solid financial position with cash and investments totaling $541.8 million and manageable long-term debt of $348.2 million as of March 31, 2025 [6]. AUM Growth Factors - Federated's money market assets reached a record $637.1 billion as of March 31, 2025, reflecting a year-over-year increase of 10.1% [4]. - The company has recorded a compound annual growth rate (CAGR) of nearly 1% in total AUM through 2027, with money market assets being the primary driver [5]. Capital Distribution Strategy - In April 2025, Federated raised its quarterly dividend by 9.7% to 34 cents per share, marking the fifth increase in five years, with a current dividend payout ratio of 30% [8]. - The company has a share repurchase program authorized for 5 million shares, with 2.7 million shares remaining available for repurchase as of March 31, 2025 [9]. Earnings Performance - Federated has consistently surpassed earnings estimates, with an average surprise of 13.08% over the trailing four quarters [10]. - Projected earnings growth for the next three to five years is 36.4%, significantly higher than the industry average of 2.9% [10][11]. Earnings Estimates - The Zacks Consensus Estimate for FHI's earnings in 2025 is projected at $4.40, with a year-over-year growth estimate of 36.22% [12]. - Recent upward revisions in earnings estimates indicate analyst optimism regarding the stock's growth potential [14].