NYSE:FHI is an undervalued gem with solid fundamentals.

Last update: Nov 23, 2023

FEDERATED HERMES INC (NYSE:FHI) has caught the attention of our stock screener as a great value stock. NYSE:FHI excels in profitability, solvency, and liquidity, all while being very reasonably priced. Let's delve into the details.

Looking at the Valuation

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NYSE:FHI has achieved a 7 out of 10:

A Price/Earnings ratio of 9.43 indicates a reasonable valuation of FHI.
FHI's Price/Earnings ratio is a bit cheaper when compared to the industry. FHI is cheaper than 67.65% of the companies in the same industry.
FHI's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 24.54.
Based on the Price/Forward Earnings ratio of 8.86, the valuation of FHI can be described as reasonable.
69.12% of the companies in the same industry are more expensive than FHI, based on the Price/Forward Earnings ratio.
FHI is valuated cheaply when we compare the Price/Forward Earnings ratio to 19.58, which is the current average of the S&P500 Index.
Based on the Enterprise Value to EBITDA ratio, FHI is valued cheaper than 90.69% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, FHI is valued a bit cheaper than 72.06% of the companies in the same industry.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of FHI may justify a higher PE ratio.

How do we evaluate the Profitability for NYSE:FHI?

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:FHI, the assigned 7 is noteworthy for profitability:

FHI has a better Return On Assets (15.71%) than 96.08% of its industry peers.
Looking at the Return On Equity, with a value of 29.70%, FHI belongs to the top of the industry, outperforming 92.65% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 19.48%, FHI belongs to the top of the industry, outperforming 95.10% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for FHI is significantly above the industry average of 9.58%.
The last Return On Invested Capital (19.48%) for FHI is above the 3 year average (16.49%), which is a sign of increasing profitability.
The Gross Margin of FHI (95.68%) is better than 93.63% of its industry peers.

Understanding NYSE:FHI's Health Score

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NYSE:FHI was assigned a score of 8 for health:

FHI has an Altman-Z score of 4.41. This indicates that FHI is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 4.41, FHI belongs to the top of the industry, outperforming 85.78% of the companies in the same industry.
The Debt to FCF ratio of FHI is 1.13, which is an excellent value as it means it would take FHI, only 1.13 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 1.13, FHI belongs to the best of the industry, outperforming 86.27% of the companies in the same industry.
A Debt/Equity ratio of 0.32 indicates that FHI is not too dependend on debt financing.
FHI has a Debt to Equity ratio of 0.32. This is in the better half of the industry: FHI outperforms 75.98% of its industry peers.
A Current Ratio of 2.78 indicates that FHI has no problem at all paying its short term obligations.
With a decent Current ratio value of 2.78, FHI is doing good in the industry, outperforming 74.51% of the companies in the same industry.
FHI has a Quick Ratio of 2.78. This indicates that FHI is financially healthy and has no problem in meeting its short term obligations.
FHI has a Quick ratio of 2.78. This is in the better half of the industry: FHI outperforms 74.51% of its industry peers.

What does the Growth looks like for NYSE:FHI

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NYSE:FHI scores a 5 out of 10:

FHI shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 22.26%, which is quite impressive.
Looking at the last year, FHI shows a quite strong growth in Revenue. The Revenue has grown by 14.85% in the last year.
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

More Decent Value stocks can be found in our Decent Value screener.

Check the latest full fundamental report of FHI for a complete fundamental analysis.

Disclaimer

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.