FEDERATED HERMES INC (NYSE:FHI), an undervalued stock with good fundamentals.

FEDERATED HERMES INC (NYSE:FHI) is a hidden gem identified by our stock screening tool, featuring undervaluation and robust fundamentals. FHI showcases decent financial health and profitability, coupled with an attractive price. Let's dig deeper into the analysis.

Assessing Valuation Metrics for FHI

ChartMill provides a Valuation Rating to every stock, ranging from 0 to 10. This rating assesses various valuation aspects, comparing price to earnings and cash flows, while considering factors like profitability and growth. FHI boasts a 8 out of 10:

• Based on the Price/Earnings ratio of 11.94, the valuation of FHI can be described as reasonable.
• Compared to the rest of the industry, the Price/Earnings ratio of FHI indicates a somewhat cheap valuation: FHI is cheaper than 60.87% of the companies listed in the same industry.
• FHI is valuated cheaply when we compare the Price/Earnings ratio to 28.88, which is the current average of the S&P500 Index.
• With a Price/Forward Earnings ratio of 9.29, the valuation of FHI can be described as very reasonable.
• Based on the Price/Forward Earnings ratio, FHI is valued a bit cheaper than the industry average as 70.87% of the companies are valued more expensively.
• FHI's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 21.20.
• 94.35% of the companies in the same industry are more expensive than FHI, based on the Enterprise Value to EBITDA ratio.
• 75.22% of the companies in the same industry are more expensive than FHI, based on the Price/Free Cash Flow ratio.
• The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• The excellent profitability rating of FHI may justify a higher PE ratio.

Looking at the Profitability

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, FHI has achieved a 8:

• With an excellent Return On Assets value of 15.86%, FHI belongs to the best of the industry, outperforming 97.39% of the companies in the same industry.
• FHI has a Return On Equity of 30.19%. This is amongst the best in the industry. FHI outperforms 95.22% of its industry peers.
• The Return On Invested Capital of FHI (21.30%) is better than 98.26% of its industry peers.
• Measured over the past 3 years, the Average Return On Invested Capital for FHI is significantly above the industry average of 7.09%.
• The last Return On Invested Capital (21.30%) for FHI is above the 3 year average (16.23%), which is a sign of increasing profitability.
• FHI has a Gross Margin of 95.24%. This is amongst the best in the industry. FHI outperforms 95.22% of its industry peers.

What does the Health looks like for FHI

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For FHI, the assigned 8 for health provides valuable insights:

• An Altman-Z score of 4.94 indicates that FHI is not in any danger for bankruptcy at the moment.
• FHI has a better Altman-Z score (4.94) than 86.96% of its industry peers.
• The Debt to FCF ratio of FHI is 1.02, which is an excellent value as it means it would take FHI, only 1.02 years of fcf income to pay off all of its debts.
• FHI has a better Debt to FCF ratio (1.02) than 86.96% of its industry peers.
• A Debt/Equity ratio of 0.32 indicates that FHI is not too dependend on debt financing.
• The Debt to Equity ratio of FHI (0.32) is better than 74.35% of its industry peers.
• FHI has a Current Ratio of 2.70. This indicates that FHI is financially healthy and has no problem in meeting its short term obligations.
• The Current ratio of FHI (2.70) is better than 79.13% of its industry peers.
• A Quick Ratio of 2.70 indicates that FHI has no problem at all paying its short term obligations.
• FHI's Quick ratio of 2.70 is fine compared to the rest of the industry. FHI outperforms 79.57% of its industry peers.

Unpacking FHI's Growth Rating

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. FHI boasts a 4 out of 10:

• The Earnings Per Share is expected to grow by 9.88% on average over the next years. This is quite good.
• 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.

For an up to date full fundamental analysis you can check the fundamental report of FHI

Keep in mind

This article should in no way be interpreted as advice. 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.