Shares of Federated Hermes, Inc. (NYSE: FHI) were trading up about 1% intraday after the investment management firm reported fourth-quarter and full-year 2025 results that showed year-over-year gains in revenue, net income, and assets under management.
FHI’s stock has traded in a roughly $47 to $55 range over the past 52 weeks, with the recent trend showing modest upside as results have consistently beaten consensus estimates and asset growth has remained strong.
Quarterly Results
For the quarter ended Dec. 31, 2025, Federated Hermes reported earnings per diluted share (EPS) of $1.39, up from $1.04 in the year-ago period and beating the Zacks consensus estimate of about $1.20. Net income for the period grew about 26% to 28% year-over-year to roughly $107 million. Revenue rose about 13.7% to $482.8 million, driven by higher investment advisory, administrative service, and other service fees. Total assets under management (AUM) reached a record $902.6 billion, an increase from prior year levels.
Revenue growth in the quarter reflected strength in money market and equity assets, which expanded from the prior quarter and contributed to higher advisory fees. Operating expenses increased modestly as distribution and incentive compensation costs rose with larger asset levels. Non-operating income was positive and reflected changes in the market value of certain investments.
Full-Year 2025 Performance
For the full year, Federated Hermes reported EPS of approximately $5.13, up from about $3.23 in 2024, and operating revenue of roughly $1.8 billion, a year-over-year increase of about 10%. Net income was about $403 million, up more than 50% from the prior year. Record AUM for 2025 reached about $903 billion, supported by growth in money market, equity, and long-term assets.
Margins and Profitability
Federated Hermes’ profitability metrics improved year over year, with net income rising faster than revenue. Fee-based revenue — a key driver for margins in asset managers — increased across most categories, including net investment advisory fees and net other service fees. Operating expense growth remained controlled relative to top-line gains, although distribution and compensation costs were notable contributors to higher expenses.
Strengths
The results highlighted several operational strengths. Record asset levels and growth in fee-earning assets supported higher revenue and EPS. Expansion in the money market and equity assets under management provided a solid base for advisory and administrative fees. Federated Hermes also delivered consistent earnings beats, topping consensus EPS and revenue estimates in the quarter. A robust balance sheet with elevated cash and investment levels supported stability and potential strategic flexibility.
Weaknesses and Challenges
Despite overall growth, some metrics pointed to headwinds. Operating expenses rose alongside revenue, driven in part by higher distribution and incentive compensation costs tied to asset growth. Fixed-income assets declined slightly from the prior quarter, and long-term growth outside money markets remained moderate. Fee margins in certain segments showed pressure relative to asset growth, reflecting competitive pricing dynamics.
Sector and Macro Pressures
Federated Hermes’ performance comes against a backdrop of broader macro pressure on financial and asset management stocks, including slower global economic growth and higher interest rates that influence investor asset allocation. Meanwhile, SaaS and software stocks have faced separate headwinds from cooling enterprise spending and tighter financing conditions, albeit different from pressures in asset management. Persistent volatility in markets and investment flows continues to affect fee-based revenue drivers across the financial sector.
52-Week Context and Trend
Over the past year, FHI shares have mirrored the firm’s consistent earnings beats and asset growth, exhibiting a stable pattern within a moderate trading range. The stock’s recent uptrend aligns with strong fourth-quarter results and record AUM, though valuations remain sensitive to broader market conditions affecting investment flows.
