📊 FHI Key Takeaways
Is Federated Hermes, Inc.. (FHI) a Good Investment?
Federated Hermes demonstrates strong fundamentals with robust 10.3% revenue growth, excellent operating margins of 26.4%, and a fortress balance sheet (0.29x D/E, $513.9M cash). However, significant concerns exist regarding cash conversion quality—operating cash flow of only $28.8M against net income of $96.4M (30% conversion rate) and weak free cash flow margin of 5% suggest earnings quality issues or structural working capital challenges.
Federated Hermes shows strong core fundamentals with double-digit revenue growth, high operating and net margins, and excellent returns on equity and assets. The balance sheet is healthy, with ample cash, low leverage, and strong liquidity, while the asset-light model supports robust free cash flow. The main caution is that earnings growth lagged revenue growth and EPS far outpaced net income, suggesting per-share gains may rely partly on capital allocation rather than purely underlying profit expansion.
Why Buy Federated Hermes, Inc.. Stock? FHI Key Strengths
- Strong operating margins (26.4%) and net margins (20.1%) demonstrate operational efficiency
- Solid revenue growth of 10.3% YoY with operating income expansion, indicating business momentum
- Conservative capital structure with 0.29x debt-to-equity ratio and $513.9M in cash reserves
- Excellent liquidity position with 3.28x current ratio providing financial flexibility
- Elevated insider activity (16 Form 4 filings in 90 days) suggests management confidence
- Strong profitability profile with 28.5% operating margin, 22.4% net margin, and high ROE/ROA
- Healthy financial position with $582.54M cash, 2.75x current ratio, and modest 0.29x debt-to-equity
- Good growth quality overall, with 10.3% revenue growth and high free cash flow generation from an asset-light business
FHI Stock Risks: Federated Hermes, Inc.. Investment Risks
- Critical disconnect between net income ($96.4M) and operating cash flow ($28.8M)—only 30% cash conversion rate is red flag for earnings quality
- Free cash flow margin of 5.0% indicates significant working capital constraints or timing issues limiting capital deployment capacity
- Low return on equity (8.0%) and return on assets (4.5%) despite strong margins suggest capital-intensive business model or inefficient asset deployment
- Operating cash flow inadequately covers capex and limits ability to fund dividends, buybacks, or strategic investments
- Net income growth of 4.7% trailed revenue growth, which may indicate margin pressure or higher expense growth
- Operating cash flow of $297.35M was well below net income of $403.30M, so cash conversion should be monitored
- EPS growth of 58.8% materially exceeded net income growth, implying per-share performance may be boosted by share count reduction or other non-operational factors
Key Metrics to Watch
- Operating cash flow to net income ratio—critical to assess earnings quality and sustainability
- Free cash flow trend and cash conversion cycle improvements
- Assets under management (AUM) growth and fee rate dynamics as core growth drivers
- Return on equity trajectory—monitor if capital deployment improves returns for shareholders
- Net income growth relative to revenue growth
- Operating cash flow conversion versus net income
Federated Hermes, Inc.. (FHI) Financial Metrics & Key Ratios
💡 AI Analyst Insight
Strong liquidity with a 3.28x current ratio provides a solid financial cushion.
FHI Profit Margin, ROE & Profitability Analysis
FHI vs Market Sector: How Federated Hermes, Inc.. Compares
How Federated Hermes, Inc.. compares to Market sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Federated Hermes, Inc.. Stock Overvalued? FHI Valuation Analysis 2026
Based on fundamental analysis, Federated Hermes, Inc.. has mixed fundamental signals relative to the Market sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Federated Hermes, Inc.. Balance Sheet: FHI Debt, Cash & Liquidity
FHI Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Federated Hermes, Inc..'s revenue has grown significantly by 24% over the 5-year period, indicating strong business expansion. The most recent EPS of $3.40 reflects profitable operations.
FHI Revenue Growth, EPS Growth & YoY Performance
FHI Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2026 | $423.5M | $96.4M | $1.25 |
| Q3 2025 | $408.5M | $87.5M | $1.06 |
| Q2 2025 | $402.6M | $21.0M | $0.20 |
| Q1 2025 | $396.4M | $75.0M | $0.89 |
| Q3 2024 | $402.7M | $75.0M | $0.86 |
| Q2 2024 | $402.6M | $21.0M | $0.20 |
| Q1 2024 | $382.2M | $69.6M | $0.78 |
| Q3 2023 | $381.1M | $69.5M | $0.78 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Federated Hermes, Inc.. Dividends, Buybacks & Capital Allocation
FHI SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Federated Hermes, Inc.. (CIK: 0001056288)
📋 Recent SEC Filings
❓ Frequently Asked Questions about FHI
What is the AI rating for FHI?
Federated Hermes, Inc.. (FHI) has a Combined AI Rating of BUY from Claude (HOLD) and ChatGPT (BUY) with 78% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are FHI's key strengths?
Claude: Strong operating margins (26.4%) and net margins (20.1%) demonstrate operational efficiency. Solid revenue growth of 10.3% YoY with operating income expansion, indicating business momentum. ChatGPT: Strong profitability profile with 28.5% operating margin, 22.4% net margin, and high ROE/ROA. Healthy financial position with $582.54M cash, 2.75x current ratio, and modest 0.29x debt-to-equity.
What are the risks of investing in FHI?
Claude: Critical disconnect between net income ($96.4M) and operating cash flow ($28.8M)—only 30% cash conversion rate is red flag for earnings quality. Free cash flow margin of 5.0% indicates significant working capital constraints or timing issues limiting capital deployment capacity. ChatGPT: Net income growth of 4.7% trailed revenue growth, which may indicate margin pressure or higher expense growth. Operating cash flow of $297.35M was well below net income of $403.30M, so cash conversion should be monitored.
What is FHI's revenue and growth?
Federated Hermes, Inc.. reported revenue of $479.0M.
Does FHI pay dividends?
Federated Hermes, Inc.. pays dividends, with $25.9M distributed to shareholders in the trailing twelve months.
Where can I find FHI SEC filings?
Official SEC filings for Federated Hermes, Inc.. (CIK: 0001056288) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is FHI's EPS?
Federated Hermes, Inc.. has a diluted EPS of $1.27.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined rating reflects both perspectives for balanced insights.
Is FHI a good stock to buy right now?
Based on our AI fundamental analysis in May 2026, Federated Hermes, Inc.. has a BUY rating with 78% confidence. The AI analysis suggests favorable fundamentals based on SEC filings. This is not investment advice.
Is FHI stock overvalued or undervalued?
Valuation metrics for FHI: ROE of 8.0% (sector avg: 15%), net margin of 20.1% (sector avg: 12%). Compare these metrics with sector averages to assess valuation.
Should I buy FHI stock in 2026?
Our dual AI analysis gives Federated Hermes, Inc.. a combined BUY rating for 2026. Revenue is data pending, with profitability above sector average. Always conduct your own research.
What is FHI's free cash flow?
Federated Hermes, Inc..'s operating cash flow is $28.8M, with capital expenditures of $4.8M. FCF margin is 5.0%.
How does FHI compare to other Market stocks?
Vs Default sector averages: Net margin 20.1% (avg: 12%), ROE 8.0% (avg: 15%), current ratio 3.28 (avg: 1.8).