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Federated Hermes (FHI - Free Report) reported fourth-quarter 2020 earnings per share of 93 cents, outpacing the Zacks Consensus Estimate of 80 cents. The figure also compares favorably with the prior-year quarter earnings of 81 cents.
Higher revenues, controlled expenses and improved assets under management (AUM) were driving factors. Also, the company’s liquidity position was strong. Yet, voluntary fee waivers and reduced net service fees were deterrents.
Net income was $95.2 million compared with the year-ago quarter’s $82.1 million.
In 2020, the company reported net income of $326.4 million or $3.23 per share compared with $272.3 million or $2.69 in 2019. Additionally, the bottom line surpassed the Zacks Consensus Estimate of $3.09.
Revenues Climb on Higher AUM, Costs Down
In full-year 2020, the company generated revenues of $1.45 billion, up 9% from the previous year. The revenue figure beat the consensus estimate of $1.44 billion.
Fourth-quarter total revenues climbed 2% year over year to $363.9 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $351.4 million. This top-line growth mainly stemmed from higher average money market, equity and fixed-income assets, along with higher performance fees, partly negated by voluntary fee waivers associated with certain money market funds in order for those funds to maintain positive or zero net yields.
Also, net investment advisory fees jumped 9% year over year to $265.6 million. In addition, administrative service fees grew 14% to $79.2 million. However, net service fees (other) plummeted 57% to $19.1 million.
During the October-December quarter, Federated derived 32% of its revenues from money-market assets, 42% from equity, 15% from fixed-income assets, 10% from alternative/private markets and multi asset, and the remaining 1% from sources other than managed assets.
The company recorded non-operating income of $14.7 million in the reported quarter, up 65% from the prior-year quarter.
Total operating expenses slipped 2% year on year to $249.1 million. Lower distribution and travel expenses, along with reduced office and occupancy costs, mainly resulted in this decline. These decreases were partly negated by higher compensation and professional service fees, systems and communications, advertising and promotional, along with other expenses.
Asset Position Steady
As of Dec 31, 2020, total AUM came in at a record $619.4 billion — up 8% year on year. Average managed assets summed $610.5 billion, up 11% year on year.
Federated witnessed money-market assets of $420.3 billion, up 6% from the year-ago period. Further, fixed-income assets were up 22% year over year to $84.3 billion.
Additionally, record equity assets of $91.8 billion rose 3% year on year. In addition, alternative market assets increased 5% to $19.1 billion.
As of Dec 31, 2020, cash and other investments were $438.8 million and total long-term debt was $75 million compared with $340.6 million and $100 million, respectively, as of Dec 31, 2019.
Capital Deployment Update
For 2020, Federated repurchased 2.94 million shares of Federated class B common stock for $67.9 million. Notably, during the fourth quarter, the company repurchased 515,700 shares of Federated class B common stock for $13.8 million.
Our Viewpoint
Federated displays substantial growth potential, supported by its diverse asset and product mix as well as a solid liquidity position. Apart from this, acquisitions are anticipated to be beneficial for the company. Though uncertain markets pose a concern, higher revenues and prudent cost management will likely aid its bottom-line performance.
Federated Hermes, Inc. Price, Consensus and EPS Surprise
Invesco (IVZ - Free Report) reported fourth-quarter adjusted earnings of 72 cents per share, surpassing the Zacks Consensus Estimate of 57 cents. Also, the bottom line grew 12.5% from the prior-year quarter. Results reflected lower operating expenses and solid liquidity position. Also, AUM balance improved. However, decline in revenues was an undermining factor.
BlackRock, Inc.’s (BLK - Free Report) adjusted earnings of $10.18 per share surpassed the Zacks Consensus Estimate of $8.84 in the December-end quarter. The figure reflected a rise of 22.1% from the year-ago quarter’s number. Results for the quarter benefited from an improvement in revenues, partly offset by higher expenses. Further, long-term net inflows resulted in a rise in AUM balance, which was a major positive for the company.
Cohen & Steers’ (CNS - Free Report) adjusted earnings of 76 cents per share surpassed the Zacks Consensus Estimate of 67 cents for the October-December quarter. Moreover, the bottom line was 2.7% higher than the year-ago reported figure. Results primarily benefited from an improvement in revenues, partially offset by higher expenses. Furthermore, driven by net inflows and market appreciation, the company recorded a rise in AUM balance.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Federated (FHI) Q4 Earnings Beat Estimates, AUM Increases
Federated Hermes (FHI - Free Report) reported fourth-quarter 2020 earnings per share of 93 cents, outpacing the Zacks Consensus Estimate of 80 cents. The figure also compares favorably with the prior-year quarter earnings of 81 cents.
Higher revenues, controlled expenses and improved assets under management (AUM) were driving factors. Also, the company’s liquidity position was strong. Yet, voluntary fee waivers and reduced net service fees were deterrents.
Net income was $95.2 million compared with the year-ago quarter’s $82.1 million.
In 2020, the company reported net income of $326.4 million or $3.23 per share compared with $272.3 million or $2.69 in 2019. Additionally, the bottom line surpassed the Zacks Consensus Estimate of $3.09.
Revenues Climb on Higher AUM, Costs Down
In full-year 2020, the company generated revenues of $1.45 billion, up 9% from the previous year. The revenue figure beat the consensus estimate of $1.44 billion.
Fourth-quarter total revenues climbed 2% year over year to $363.9 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $351.4 million. This top-line growth mainly stemmed from higher average money market, equity and fixed-income assets, along with higher performance fees, partly negated by voluntary fee waivers associated with certain money market funds in order for those funds to maintain positive or zero net yields.
Also, net investment advisory fees jumped 9% year over year to $265.6 million. In addition, administrative service fees grew 14% to $79.2 million. However, net service fees (other) plummeted 57% to $19.1 million.
During the October-December quarter, Federated derived 32% of its revenues from money-market assets, 42% from equity, 15% from fixed-income assets, 10% from alternative/private markets and multi asset, and the remaining 1% from sources other than managed assets.
The company recorded non-operating income of $14.7 million in the reported quarter, up 65% from the prior-year quarter.
Total operating expenses slipped 2% year on year to $249.1 million. Lower distribution and travel expenses, along with reduced office and occupancy costs, mainly resulted in this decline. These decreases were partly negated by higher compensation and professional service fees, systems and communications, advertising and promotional, along with other expenses.
Asset Position Steady
As of Dec 31, 2020, total AUM came in at a record $619.4 billion — up 8% year on year. Average managed assets summed $610.5 billion, up 11% year on year.
Federated witnessed money-market assets of $420.3 billion, up 6% from the year-ago period. Further, fixed-income assets were up 22% year over year to $84.3 billion.
Additionally, record equity assets of $91.8 billion rose 3% year on year. In addition, alternative market assets increased 5% to $19.1 billion.
As of Dec 31, 2020, cash and other investments were $438.8 million and total long-term debt was $75 million compared with $340.6 million and $100 million, respectively, as of Dec 31, 2019.
Capital Deployment Update
For 2020, Federated repurchased 2.94 million shares of Federated class B common stock for $67.9 million. Notably, during the fourth quarter, the company repurchased 515,700 shares of Federated class B common stock for $13.8 million.
Our Viewpoint
Federated displays substantial growth potential, supported by its diverse asset and product mix as well as a solid liquidity position. Apart from this, acquisitions are anticipated to be beneficial for the company. Though uncertain markets pose a concern, higher revenues and prudent cost management will likely aid its bottom-line performance.
Federated Hermes, Inc. Price, Consensus and EPS Surprise
Federated Hermes, Inc. price-consensus-eps-surprise-chart | Federated Hermes, Inc. Quote
Currently, Federated carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Investment Managers
Invesco (IVZ - Free Report) reported fourth-quarter adjusted earnings of 72 cents per share, surpassing the Zacks Consensus Estimate of 57 cents. Also, the bottom line grew 12.5% from the prior-year quarter. Results reflected lower operating expenses and solid liquidity position. Also, AUM balance improved. However, decline in revenues was an undermining factor.
BlackRock, Inc.’s (BLK - Free Report) adjusted earnings of $10.18 per share surpassed the Zacks Consensus Estimate of $8.84 in the December-end quarter. The figure reflected a rise of 22.1% from the year-ago quarter’s number. Results for the quarter benefited from an improvement in revenues, partly offset by higher expenses. Further, long-term net inflows resulted in a rise in AUM balance, which was a major positive for the company.
Cohen & Steers’ (CNS - Free Report) adjusted earnings of 76 cents per share surpassed the Zacks Consensus Estimate of 67 cents for the October-December quarter. Moreover, the bottom line was 2.7% higher than the year-ago reported figure. Results primarily benefited from an improvement in revenues, partially offset by higher expenses. Furthermore, driven by net inflows and market appreciation, the company recorded a rise in AUM balance.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>