Last week saw the newest full-year earnings release from Federated Hermes, Inc. (NYSE:FHI), an important milestone in the company's journey to build a stronger business. The result was positive overall - although revenues of US$1.8b were in line with what the analysts predicted, Federated Hermes surprised by delivering a statutory profit of US$5.13 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Taking into account the latest results, the consensus forecast from Federated Hermes' four analysts is for revenues of US$1.95b in 2026. This reflects a meaningful 8.5% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be US$5.24, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.92b and earnings per share (EPS) of US$5.13 in 2026. So the consensus seems to have become somewhat more optimistic on Federated Hermes' earnings potential following these results.

The consensus price target was unchanged at US$53.86, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Federated Hermes analyst has a price target of US$55.00 per share, while the most pessimistic values it at US$50.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Federated Hermes' growth to accelerate, with the forecast 8.5% annualised growth to the end of 2026 ranking favourably alongside historical growth of 5.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Federated Hermes to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Federated Hermes' earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Federated Hermes going out to 2028, and you can see them free on our platform here..

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.