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Federated Hermes (FHI) Q2 Earnings Top Estimates, AUM Rise
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Federated Hermes, Inc.’s (FHI - Free Report) second-quarter 2024 adjusted earnings per share of 96 cents, beating the Zacks Consensus Estimate of 89 cents per share. The bottom line increased from 81 cents in the year-ago quarter.
An increase in net administrative service fees is a major driving factor. The company’s assets under management (AUM) touched a record level. However, the downtick in revenues and a higher expense base acted as a headwind.
Net income (GAAP basis) of $21 million plunged 71% from the year-ago quarter’s tally.
Revenues Decline, Operating Expenses Rise
Total revenues declined 7% year over year to $402.6 million. The top line surpassed the Zacks Consensus Estimate of $397.4 million.
Quarterly net investment advisory fees fell 13% to $270.6 million. Our estimate for the metric was pegged at $272.4 million.
Net other service fees dropped 3% to $36.6 million and net administrative service fees rose 12% to $95.4 million. Our estimate for the other service fees and administrative service fees was pegged at $36.4 million and $87.9 million, respectively.
Total operating expenses increased 8% year over year to $361.9 million. Our expectation for the metric was $301.6 million.
Federated Hermes recorded a net non-operating income of $1.9 million compared with $2.2 million in the prior-year quarter.
Balance Sheet Position
As of Jun 30, 2024, cash and other investments and total long-term debt were$452.9 million and $347.9 million compared with $520.8 million and $347.7 million, respectively, as of Jun 30, 2023.
Strong Asset Position
As of Jun 30, 2024, total managed assets were at a record level of $782.7 billion, up 11% year over year. Our estimate for the metric was $726.1 billion.
FHI reported money-market assets of $586.6 billion, up 15% year over year. Fixed-income assets increased 9% to $95.3 billion. Our expectations for money-market assets and fixed-income assets were $533.6 billion and $90.6 billion, respectively.
Equity assets of $77.9 billion declined 6% from the prior-year quarter’s tally. Alternative/private market assets declined 7% to $20.1 billion. Our estimates for Equity assets and alternative/private market assets were pegged at $78.7 billion and $20.4 billion, respectively.
Average managed assets totaled $779.6 billion, up 11% year over year. Our estimate was pegged at $721.4 billion.
Capital Distribution Update
The company declared a quarterly cash dividend of 31 cents per share, which will be paid out on Aug 15, 2024, to shareholders of record as of Aug 8.
The company repurchased 1,559,200 shares of its class B common stock for $47.5 million in the reported quarter.
Our Viewpoint
Federated Hermes displays substantial growth potential, supported by its diverse asset and product mix and a solid liquidity position. Though uncertain markets pose a threat, a solid asset under management balance will likely aid its financials.
Federated Hermes, Inc. Price, Consensus and EPS Surprise
BlackRock, Inc.’s (BLK - Free Report) second-quarter 2024 adjusted earnings of $10.36 per share handily surpassed the Zacks Consensus Estimate of $9.96. The figure rose 12% from the year-ago quarter’s tally.
BLK’s results benefited from a rise in revenues. AUM witnessed solid improvement driven by net inflows and market appreciation. However, higher expenses and a fall in non-operating income acted as headwinds for BLK.
Invesco’s (IVZ - Free Report) second-quarter 2024 adjusted earnings of 43 cents surpassed the Zacks Consensus Estimate of 41 cents. The bottom line increased 38.7% from the prior-year quarter’s tally.
IVZ’s results have been primarily aided by a decline in adjusted expenses. An increase in the assets under management (AUM) balance on decent inflows was a positive. However, marginally lower adjusted revenues hurt results to some extent.
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Federated Hermes (FHI) Q2 Earnings Top Estimates, AUM Rise
Federated Hermes, Inc.’s (FHI - Free Report) second-quarter 2024 adjusted earnings per share of 96 cents, beating the Zacks Consensus Estimate of 89 cents per share. The bottom line increased from 81 cents in the year-ago quarter.
An increase in net administrative service fees is a major driving factor. The company’s assets under management (AUM) touched a record level. However, the downtick in revenues and a higher expense base acted as a headwind.
Net income (GAAP basis) of $21 million plunged 71% from the year-ago quarter’s tally.
Revenues Decline, Operating Expenses Rise
Total revenues declined 7% year over year to $402.6 million. The top line surpassed the Zacks Consensus Estimate of $397.4 million.
Quarterly net investment advisory fees fell 13% to $270.6 million. Our estimate for the metric was pegged at $272.4 million.
Net other service fees dropped 3% to $36.6 million and net administrative service fees rose 12% to $95.4 million. Our estimate for the other service fees and administrative service fees was pegged at $36.4 million and $87.9 million, respectively.
Total operating expenses increased 8% year over year to $361.9 million. Our expectation for the metric was $301.6 million.
Federated Hermes recorded a net non-operating income of $1.9 million compared with $2.2 million in the prior-year quarter.
Balance Sheet Position
As of Jun 30, 2024, cash and other investments and total long-term debt were$452.9 million and $347.9 million compared with $520.8 million and $347.7 million, respectively, as of Jun 30, 2023.
Strong Asset Position
As of Jun 30, 2024, total managed assets were at a record level of $782.7 billion, up 11% year over year. Our estimate for the metric was $726.1 billion.
FHI reported money-market assets of $586.6 billion, up 15% year over year. Fixed-income assets increased 9% to $95.3 billion. Our expectations for money-market assets and fixed-income assets were $533.6 billion and $90.6 billion, respectively.
Equity assets of $77.9 billion declined 6% from the prior-year quarter’s tally. Alternative/private market assets declined 7% to $20.1 billion. Our estimates for Equity assets and alternative/private market assets were pegged at $78.7 billion and $20.4 billion, respectively.
Average managed assets totaled $779.6 billion, up 11% year over year. Our estimate was pegged at $721.4 billion.
Capital Distribution Update
The company declared a quarterly cash dividend of 31 cents per share, which will be paid out on Aug 15, 2024, to shareholders of record as of Aug 8.
The company repurchased 1,559,200 shares of its class B common stock for $47.5 million in the reported quarter.
Our Viewpoint
Federated Hermes displays substantial growth potential, supported by its diverse asset and product mix and a solid liquidity position. Though uncertain markets pose a threat, a solid asset under management balance will likely aid its financials.
Federated Hermes, Inc. Price, Consensus and EPS Surprise
Federated Hermes, Inc. price-consensus-eps-surprise-chart | Federated Hermes, Inc. Quote
Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
BlackRock, Inc.’s (BLK - Free Report) second-quarter 2024 adjusted earnings of $10.36 per share handily surpassed the Zacks Consensus Estimate of $9.96. The figure rose 12% from the year-ago quarter’s tally.
BLK’s results benefited from a rise in revenues. AUM witnessed solid improvement driven by net inflows and market appreciation. However, higher expenses and a fall in non-operating income acted as headwinds for BLK.
Invesco’s (IVZ - Free Report) second-quarter 2024 adjusted earnings of 43 cents surpassed the Zacks Consensus Estimate of 41 cents. The bottom line increased 38.7% from the prior-year quarter’s tally.
IVZ’s results have been primarily aided by a decline in adjusted expenses. An increase in the assets under management (AUM) balance on decent inflows was a positive. However, marginally lower adjusted revenues hurt results to some extent.