Reviewing FactSet Research Systems (NYSE:FDS) & Federated Hermes (NYSE:FHI)

Federated Hermes (NYSE:FHI) and FactSet Research Systems (NYSE:FDS) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, risk, valuation and dividends.

Insider and Institutional Ownership

75.9% of Federated Hermes shares are held by institutional investors. Comparatively, 91.2% of FactSet Research Systems shares are held by institutional investors. 4.2% of Federated Hermes shares are held by insiders. Comparatively, 1.2% of FactSet Research Systems shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Federated Hermes and FactSet Research Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Federated Hermes	21.30%	34.03%	18.54%
FactSet Research Systems	23.21%	30.68%	15.43%

Dividends

Federated Hermes pays an annual dividend of $1.52 per share and has a dividend yield of 2.4%. FactSet Research Systems pays an annual dividend of $4.64 per share and has a dividend yield of 1.5%. Federated Hermes pays out 28.3% of its earnings in the form of a dividend. FactSet Research Systems pays out 30.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Federated Hermes has raised its dividend for 4 consecutive years and FactSet Research Systems has raised its dividend for 27 consecutive years. Federated Hermes is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current recommendations and price targets for Federated Hermes and FactSet Research Systems, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Federated Hermes	1	4	1	2	2.50
FactSet Research Systems	6	10	1	1	1.83

Federated Hermes presently has a consensus price target of $57.40, indicating a potential downside of 7.58%. FactSet Research Systems has a consensus price target of $257.57, indicating a potential downside of 17.65%. Given Federated Hermes’ stronger consensus rating and higher possible upside, analysts plainly believe Federated Hermes is more favorable than FactSet Research Systems.

Risk and Volatility

Federated Hermes has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500. Comparatively, FactSet Research Systems has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.

Earnings & Valuation

This table compares Federated Hermes and FactSet Research Systems”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Federated Hermes	$1.80 billion	2.58	$403.30 million	$5.38	11.54
FactSet Research Systems	$2.32 billion	4.79	$597.04 million	$15.18	20.60

FactSet Research Systems has higher revenue and earnings than Federated Hermes. Federated Hermes is trading at a lower price-to-earnings ratio than FactSet Research Systems, indicating that it is currently the more affordable of the two stocks.

Summary

FactSet Research Systems beats Federated Hermes on 9 of the 17 factors compared between the two stocks.

About Federated Hermes

Federated Hermes, Inc. is a publicly owned investment manager. Through its subsidiaries, the firm provides its services to individuals, including high net worth individuals, banking or thrift institutions, investment companies, pension and profit sharing plans, pooled investment vehicles, charitable organizations, state or municipal government entities, and registered investment advisors. Through its subsidiaries, it manages separate client-focused equity, fixed income, balanced and money market mutual funds along with separate client-focused equity, fixed income, money market, and balanced portfolios. Through its subsidiaries, the firm invests in the public equity and fixed income markets across the globe. It invests in growth and value stocks of small-cap, mid-cap, and large-cap companies. The firm makes its fixed income investments in ultra-short, short-term, and intermediate-term mortgage-backed, U.S. Government, U.S. corporate, high yield, and municipal securities. It employs both fundamental and quantitative analysis to make its equity investments. Federated Hermes, Inc. was founded in 1955 and is based in Pittsburgh, Pennsylvania with additional offices in New York City and London, United Kingdom.

About FactSet Research Systems

FactSet Research Systems Inc., a financial data company, provides integrated financial information and analytical applications to the investment community in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company delivers insight and information through the workflow solutions of research, analytics and trading, content and technology solutions, and wealth. It serves portfolio managers, investment banks, asset managers, wealth advisors, corporate clients, and other financial services entities. FactSet Research Systems Inc. was founded in 1978 and is headquartered in Norwalk, Connecticut.