Should Value Investors Buy Federated Hermes (FHI) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Federated Hermes (FHI) is a stock many investors are watching right now. FHI is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.60 right now. For comparison, its industry sports an average P/E of 15.70. Over the past year, FHI's Forward P/E has been as high as 13.15 and as low as 8.84, with a median of 9.86.
We also note that FHI holds a PEG ratio of 0.78. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. FHI's PEG compares to its industry's average PEG of 0.87. Over the last 12 months, FHI's PEG has been as high as 0.80 and as low as 0.57, with a median of 0.66.
Another notable valuation metric for FHI is its P/B ratio of 2.68. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.84. Within the past 52 weeks, FHI's P/B has been as high as 3.56 and as low as 2.39, with a median of 2.67.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. FHI has a P/S ratio of 1.87. This compares to its industry's average P/S of 2.78.
Finally, our model also underscores that FHI has a P/CF ratio of 8.97. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. FHI's P/CF compares to its industry's average P/CF of 17.50. Over the past year, FHI's P/CF has been as high as 13.25 and as low as 8.37, with a median of 9.52.
These are just a handful of the figures considered in Federated Hermes's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that FHI is an impressive value stock right now.
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Federated Hermes, Inc. (FHI) : Free Stock Analysis Report
