Street Calls of the Week
When InvestingPro’s Fair Value models identified Federated Hermes (NYSE:FHI) as significantly undervalued in July 2024, the investment management firm was trading at $32.34. Today, the stock stands at $52.78, delivering a remarkable 63% return and validating the power of data-driven valuation analysis. While past performance doesn’t guarantee future results, investors can discover similar opportunities through InvestingPro’s Most undervalued list.
Federated Hermes, with over $846 billion in assets under management, has established itself as a leading provider of money market funds and diversified investment solutions. When InvestingPro’s Fair Value analysis highlighted the stock’s potential, the company was demonstrating solid fundamentals with $1.59 billion in revenue and $429 million in EBITDA, despite showing mixed price performance in the preceding months.
The Fair Value model’s estimated upside of 47.8% proved conservative, as FHI’s strong execution and favorable market conditions drove the stock beyond initial projections. The company’s subsequent performance has been impressive, with revenue growing to $1.68 billion, EBITDA expanding to $490.8 million, and EPS surging from $2.95 to $4.52.
Recent developments have continued to support the original thesis. The company’s Q2 2025 earnings exceeded expectations, with AUM reaching new highs and the equity segment showing notable improvement. The firm’s strong position in money market funds has proven particularly valuable during the current interest rate environment, while its 27-year history of consistent dividend payments has attracted income-focused investors.
InvestingPro’s Fair Value analysis combines multiple valuation methodologies, including intrinsic worth calculations, margin of safety considerations, and future cash flow projections. This comprehensive approach helps investors identify opportunities where market prices significantly diverge from fundamental value, as demonstrated in the Federated Hermes case.
The success of this Fair Value call exemplifies the advantage of combining sophisticated analysis with timely market intelligence. For investors seeking similar opportunities, InvestingPro offers access to real-time Fair Value ratings, financial health scores, and proprietary analysis across thousands of stocks. Learn more about InvestingPro to discover your next potential market-beating investment.