Should Value Investors Buy Federated Hermes (FHI) Stock?
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Federated Hermes (FHI) is a stock many investors are watching right now. FHI is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 10.25, while its industry has an average P/E of 17.47. Over the past year, FHI's Forward P/E has been as high as 13.06 and as low as 8.58, with a median of 9.59.
Investors will also notice that FHI has a PEG ratio of 0.80. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FHI's PEG compares to its industry's average PEG of 1.23. FHI's PEG has been as high as 1.46 and as low as 0.74, with a median of 1.09, all within the past year.
Another notable valuation metric for FHI is its P/B ratio of 3.25. Investors use the P/B ratio to look at a stock's market value versus 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 3.73. Over the past 12 months, FHI's P/B has been as high as 3.77 and as low as 2.39, with a median of 3.09.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FHI has a P/S ratio of 2.11. This compares to its industry's average P/S of 3.08.
These are only a few of the key metrics included in Federated Hermes's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, FHI looks like an impressive value stock at the moment.
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