Federated Hermes

FHI

Asset Management · Financial Services

Price

$58.69

-0.93 (-1.56%)

Market Cap

$4.46B

Winston Score

Winston is happy

A high-quality business with solid fundamentals.

Share count falling — buybacks

−19.8% over 4y

The company has reduced its share count over this period, returning value to shareholders through buybacks.

Diluted shares outstanding: 93.6M (2021) → 75.1M (2025)

Federated Hermes is an investment management company that pools money from investors and manages it on their behalf. It runs mutual funds, money market funds, and other investment products used by banks, retirement plans, corporations, and everyday investors. The company is one of the largest managers of money market funds in the United States, which are low-risk accounts businesses and institutions use to park cash.

Federated Hermes earns money by charging fees based on a percentage of the assets it manages — the more money clients invest, the more revenue the company collects. It operates mainly in the United States but also has a meaningful presence in Europe through its Hermes investment arm, which focuses on responsible investing strategies. The company's heavy reliance on money market funds is both a strength and a risk, since those funds tend to attract more cash when interest rates are high but can see outflows when rates fall, making revenue sensitive to Federal Reserve policy decisions.

Winston Score History

Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+13.6% YoY

YoY Growth Rate

Steady revenue growth

EPS Growth

+1.6% YoY

YoY Growth Rate

Slow EPS growth

R&D Spend

$0/ year

0.0% of revenue

Below sector average (7%)

Research and development spending

Insider Activity

8.9%ownership

Insiders own a meaningful stake in the company

Cash Position

Cash flow positive

$514M cash & investments

Quarterly Free Cash Flow

→ Burn rate stable

Company generates more cash than it spends — no dilution risk from fundraising

Growth + cash flow

Federated Hermes is a rare growth stock that's already generating positive cash flow while growing at 14%. The Winston Score doesn't fully credit this transition from "burner" to "earner."

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

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Quality

Gross Margin

71.7%

Premium pricing power — 71.7% gross margin

Operating Margin

26.3%

Excellent — 26.3% operating margin

ROCE

8.1%

Below par — 8.1% return on capital

ROIC between 5% and 15%. They earn 5 to 15 cents back per year on every dollar invested.

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Growth

Sales YoY

+12.3%

Fast-growing sales (12.3% YoY)

EPS YoY

+47.0%

Earnings growing fast (47.0% YoY)

Earnings growing 25%+ a year. The compounder zone.

EPS Consistency

8/8 quarters

Every recent quarter grew earnings vs last year

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Cash Flow

Cash Conversion

78%

Modest — 78% of profit becomes cash

FCF Margin

16.2%

Converts sales into free cash efficiently (16.2%)

FCF margin between 10% and 20%. Every $100 in sales becomes $10 to $20 in real cash.

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Stability

Debt / Equity

0.31

Conservative — low debt load (0.31)

Interest Cover

40.05x

Comfortably covers interest (40.1x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

11.2x

Attractive valuation — P/E 11.2

P/E in the normal range. Price is roughly $15 for every $1 of yearly profit.

P/E vs Forward

+1.3

GROWING

Earnings expected to grow — slightly cheaper on forward P/E

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Dividends

Dividend Yield

2.39%

Moderate income — 2.39% yield

Standard yield zone for stable dividend payers. A meaningful piece of total return.

Dividend Growth

+10.2%

Dividend growing fast (10.2% YoY)

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