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Federated Hermes, Inc. Just Recorded A 21% EPS Beat: Here's What Analysts Are Forecasting Next

Simply Wall St
·4 min read

Federated Hermes, Inc. (NYSE:FHI) just released its third-quarter report and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of US$364m, some 4.2% above estimates, and statutory earnings per share (EPS) coming in at US$0.85, 21% ahead of expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Federated Hermes after the latest results.

See our latest analysis for Federated Hermes

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Taking into account the latest results, the nine analysts covering Federated Hermes provided consensus estimates of US$1.39b revenue in 2021, which would reflect a perceptible 3.5% decline on its sales over the past 12 months. Statutory earnings per share are forecast to decline 16% to US$2.63 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.39b and earnings per share (EPS) of US$2.62 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of US$27.11, suggesting that the company has met expectations in its recent result. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Federated Hermes analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$24.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. We would highlight that sales are expected to reverse, with the forecast 3.5% revenue decline a notable change from historical growth of 7.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.1% annually for the foreseeable future. It's pretty clear that Federated Hermes' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Federated Hermes' revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Federated Hermes going out to 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Federated Hermes you should be aware of.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.