Earnings Beat: Federated Hermes, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Investors in Federated Hermes, Inc. (NYSE:FHI) had a good week, as its shares rose 8.5% to close at US$40.41 following the release of its quarterly results. It looks like a credible result overall - although revenues of US$424m were what the analysts expected, Federated Hermes surprised by delivering a (statutory) profit of US$1.25 per share, an impressive 37% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Our free stock report includes 1 warning sign investors should be aware of before investing in Federated Hermes. Read for free now.

Taking into account the latest results, the most recent consensus for Federated Hermes from four analysts is for revenues of US$1.82b in 2025. If met, it would imply a decent 9.7% increase on its revenue over the past 12 months. Per-share earnings are expected to swell 17% to US$4.35. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.73b and earnings per share (EPS) of US$4.09 in 2025. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

See our latest analysis for Federated Hermes

It will come as no surprise to learn that the analysts have increased their price target for Federated Hermes 5.5% to US$40.86on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Federated Hermes at US$46.00 per share, while the most bearish prices it at US$37.00. This is a very narrow spread of estimates, implying either that Federated Hermes is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Federated Hermes' rate of growth is expected to accelerate meaningfully, with the forecast 13% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 4.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.2% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Federated Hermes to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Federated Hermes' earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Federated Hermes going out to 2027, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 1 warning sign for Federated Hermes that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.