Federated Hermes, which was founded in 1955 and is headquartered in Pittsburgh, Pennsylvania, provides investment management services, offering equity, fixed-income, alternative/private markets, multi-asset, and liquidity solutions to institutions and intermediaries. The company operates under investment management business and is geographically segmented into: Domestic and Foreign.

Strategic acquisition

On October 23, 2025, Federated Hermes announced the acquisition of 80% stake in FCP Fund Manager, L.P., a Maryland-based private US real estate investment manager with client assets of $3.8bn. The total consideration of $331m includes $215.8m in cash, $23.2m in Class B stock at closing, and up to $92m in contingent consideration over several year periods. The acquisition would expand the company's Private Markets/Alternatives offerings in key US and UK markets, boosting its private equity, credit, infrastructure, and real estate.

Sustained long-term growth

Federated Hermes posted decent performance over FY 21-24, achieving a revenue CAGR of 7.9%, reaching $1.6bn in FY 24, driven by improved performance in the money market and expansion of private markets. EBIT registered a CAGR of 5.1%, reaching $425m. However, margins contracted from 28.2% to 26.1%.

Over FY 21-24, FCF grew from $290m to $334m, supported by robust growth in cash flow from operations, from $170m to $347m. This led to rise in cash and cash equivalent from $233m to $504m.

Over Q3 25, the company experienced steady revenue growth, driven by increased domestic demand and higher average money market and equity assets. In addition, EBIT margin expanded by 22bp to 27.6%.

In comparison, Victory Capital Holdings, Inc., a local peer, reported a revenue CAGR of 0.1% over FY 21-24, reaching $893m in FY 24. EBIT grew at CAGR of 1.7% to $429m, with margin expansion from 45.9% to 48.0%.

Steady returns & yield

Over the past year, the company's stock delivered returns of 17.4%. In comparison, Victory Capital posted negative returns of 12.5%. The company paid an annual dividend of $2.2 in FY 24, resulting in a dividend yield of 5.4%.

Federated Hermes is currently trading at a P/E of 10.2x, based on the FY 25 estimated EPS of $4.9, which is lower than its 3-year historical average of 12.1x and Victory Capital’s valuation of 12.3x. The company is currently trading at an EV/EBIT multiple of 6.8x, based on FY 25 estimated EBIT of $505.6m, which is lower than its 3-year historical average of 8.4x and Victory Capital (8.1x).

Federated Hermes is monitored by eight analysts, one of whom has ‘Buy’ rating and seven have ‘Hold’ ratings for an average target price of $52.4, implying 4.2% upside potential from the share's current market price.

Analysts’ views are supported by an estimated EBIT CAGR of 16.6% over FY 24-27, reaching $572.9m with margin expansion of 671bp to 28.9% in FY 27. In addition, analysts estimate a net profit CAGR of 14.3% to $401.1m. Likewise, for Victory Capital, the analysts estimate an EBIT CAGR of 20.8% over FY 24-27 and a net profit CAGR of 32.5% over FY 24-26.

Overall, Federated Hermes posted stable operational strength and strategic evolution, positioning the firm for continued growth and enhanced competitiveness in a dynamic investment management landscape. However, it faces risks from market volatility, regulatory changes, and operational risks, potentially impacting asset flows and investment performance.