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When InvestingPro’s Fair Value model identified Federated Hermes (NYSE:FHI) as significantly undervalued in July 2024, the investment management firm was trading at $32.34. Today, the stock trades above $51, delivering a remarkable 62% return and validating the model’s analytical precision. For investors seeking similar opportunities, InvestingPro’s Most undervalued list continues to identify potential market inefficiencies.
Federated Hermes, with over $846 billion in assets under management, has demonstrated strong fundamental growth since the initial analysis. When InvestingPro’s models flagged the opportunity, the company reported quarterly revenue of $1.59 billion and EBITDA of $429 million. The stock had shown mixed performance in the preceding months, with monthly returns fluctuating between -9% and +5%, suggesting market uncertainty about its true value.
The company’s subsequent performance has exceeded expectations, with revenue growing to $1.68 billion and EBITDA reaching $490 million. Notably, earnings per share surged from $2.95 to $4.52, representing a 53% increase. The firm’s money market fund business has particularly benefited from the current interest rate environment, while its equity segment recently reported a 10% surge in assets.
InvestingPro’s Fair Value analysis proved prescient by identifying multiple strength factors, including the company’s 27-year dividend payment history, robust return on equity of 23%, and strong market position in money market funds. Recent quarterly results have continued to beat analyst expectations, with Q2 2025 showing significant AUM growth and positive equity flows.
The Fair Value methodology combines multiple valuation approaches, including intrinsic value calculations, comparable company analyses, and future cash flow projections. This comprehensive approach helped identify Federated Hermes’s significant upside potential of 47.8% in July 2024, a target that has been substantially exceeded.
For investors looking to identify similar opportunities, InvestingPro offers advanced valuation tools, real-time Fair Value alerts, and comprehensive financial analysis. With success stories like Federated Hermes demonstrating the power of data-driven investment decisions, InvestingPro continues to help investors identify market inefficiencies before they correct.