NYSE:FHI, an undervalued stock with good fundamentals.

Last update: Apr 9, 2024

Our stock screener has spotted FEDERATED HERMES INC (NYSE:FHI) as an undervalued stock with solid fundamentals. NYSE:FHI shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Exploring NYSE:FHI's Valuation

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NYSE:FHI, the assigned 7 reflects its valuation:

The Price/Earnings ratio is 10.79, which indicates a very decent valuation of FHI.
FHI's Price/Earnings ratio is a bit cheaper when compared to the industry. FHI is cheaper than 66.50% of the companies in the same industry.
When comparing the Price/Earnings ratio of FHI to the average of the S&P500 Index (26.14), we can say FHI is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 10.10, the valuation of FHI can be described as reasonable.
66.50% of the companies in the same industry are more expensive than FHI, based on the Price/Forward Earnings ratio.
FHI's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 22.43.
FHI's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. FHI is cheaper than 92.23% of the companies in the same industry.
71.84% of the companies in the same industry are more expensive than FHI, based on the Price/Free Cash Flow ratio.
FHI has an outstanding profitability rating, which may justify a higher PE ratio.

Exploring NYSE:FHI's Profitability

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NYSE:FHI, the assigned 8 is a significant indicator of profitability:

Looking at the Return On Assets, with a value of 16.70%, FHI belongs to the top of the industry, outperforming 97.09% of the companies in the same industry.
FHI has a better Return On Equity (31.12%) than 94.17% of its industry peers.
Looking at the Return On Invested Capital, with a value of 20.18%, FHI belongs to the top of the industry, outperforming 96.12% of the companies in the same industry.
FHI had an Average Return On Invested Capital over the past 3 years of 16.38%. This is significantly above the industry average of 8.39%.
The 3 year average ROIC (16.38%) for FHI is below the current ROIC(20.18%), indicating increased profibility in the last year.
FHI has a better Gross Margin (95.69%) than 93.69% of its industry peers.

How do we evaluate the Health for NYSE:FHI?

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NYSE:FHI scores a 9 out of 10:

FHI has an Altman-Z score of 4.67. This indicates that FHI is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 4.67, FHI belongs to the best of the industry, outperforming 84.47% of the companies in the same industry.
FHI has a debt to FCF ratio of 1.14. This is a very positive value and a sign of high solvency as it would only need 1.14 years to pay back of all of its debts.
The Debt to FCF ratio of FHI (1.14) is better than 85.44% of its industry peers.
FHI has a Debt/Equity ratio of 0.31. This is a healthy value indicating a solid balance between debt and equity.
FHI has a better Debt to Equity ratio (0.31) than 75.24% of its industry peers.
FHI has a Current Ratio of 2.51. This indicates that FHI is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 2.51, FHI is in the better half of the industry, outperforming 73.79% of the companies in the same industry.
FHI has a Quick Ratio of 2.51. This indicates that FHI is financially healthy and has no problem in meeting its short term obligations.
With a decent Quick ratio value of 2.51, FHI is doing good in the industry, outperforming 73.79% of the companies in the same industry.

ChartMill's Evaluation of Growth

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 4 out of 10:

FHI shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 16.38%, which is quite good.
The Revenue has grown by 12.47% in the past year. This is quite good.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

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

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.