FactSet Research Systems (NYSE:FDS – Get Free Report) and Federated Hermes (NYSE:FHI – Get Free Report) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, earnings, risk, analyst recommendations, institutional ownership, dividends and valuation.
Risk and Volatility
FactSet Research Systems has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, Federated Hermes has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for FactSet Research Systems and Federated Hermes, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| FactSet Research Systems | 6 | 10 | 1 | 1 | 1.83 |
| Federated Hermes | 1 | 4 | 1 | 2 | 2.50 |
Dividends
FactSet Research Systems pays an annual dividend of $4.64 per share and has a dividend yield of 1.5%. Federated Hermes pays an annual dividend of $1.52 per share and has a dividend yield of 2.4%. FactSet Research Systems pays out 30.6% of its earnings in the form of a dividend. Federated Hermes pays out 28.3% 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. FactSet Research Systems has increased its dividend for 27 consecutive years and Federated Hermes has increased its dividend for 4 consecutive years. Federated Hermes is clearly the better dividend stock, given its higher yield and lower payout ratio.
Profitability
This table compares FactSet Research Systems and Federated Hermes’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| FactSet Research Systems | 23.21% | 30.68% | 15.43% |
| Federated Hermes | 21.30% | 34.03% | 18.54% |
Institutional and Insider Ownership
91.2% of FactSet Research Systems shares are owned by institutional investors. Comparatively, 75.9% of Federated Hermes shares are owned by institutional investors. 1.2% of FactSet Research Systems shares are owned by insiders. Comparatively, 4.2% of Federated Hermes shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Valuation & Earnings
This table compares FactSet Research Systems and Federated Hermes”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| FactSet Research Systems | $2.32 billion | 4.79 | $597.04 million | $15.18 | 20.60 |
| Federated Hermes | $1.80 billion | 2.58 | $403.30 million | $5.38 | 11.54 |
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 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.
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.
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