Financial Contrast: Federated Hermes (NYSE:FHI) versus Piper Sandler Companies (NYSE:PIPR)

Piper Sandler Companies (NYSE:PIPR) and Federated Hermes (NYSE:FHI) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Piper Sandler Companies and Federated Hermes, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Piper Sandler Companies	1	2	3	0	2.33
Federated Hermes	1	4	2	1	2.38

Piper Sandler Companies currently has a consensus price target of $90.81, suggesting a potential upside of 39.24%. Federated Hermes has a consensus price target of $57.40, suggesting a potential upside of 1.42%. Given Piper Sandler Companies’ higher probable upside, research analysts plainly believe Piper Sandler Companies is more favorable than Federated Hermes.

Dividends

Piper Sandler Companies pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Federated Hermes pays an annual dividend of $1.52 per share and has a dividend yield of 2.7%. Piper Sandler Companies pays out 18.5% 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. Piper Sandler Companies has raised its dividend for 1 consecutive years and Federated Hermes has raised its dividend for 4 consecutive years. Federated Hermes is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Piper Sandler Companies and Federated Hermes”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Piper Sandler Companies	$1.90 billion	2.42	$281.33 million	$4.32	15.10
Federated Hermes	$1.80 billion	2.35	$403.30 million	$5.38	10.52

Federated Hermes has lower revenue, but higher earnings than Piper Sandler Companies. Federated Hermes is trading at a lower price-to-earnings ratio than Piper Sandler Companies, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Piper Sandler Companies has a beta of 1.43, meaning that its share price is 43% more volatile than the S&P 500. Comparatively, Federated Hermes has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500.

Insider & Institutional Ownership

72.8% of Piper Sandler Companies shares are owned by institutional investors. Comparatively, 75.9% of Federated Hermes shares are owned by institutional investors. 3.1% of Piper Sandler Companies shares are owned by company insiders. Comparatively, 4.2% of Federated Hermes shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Piper Sandler Companies and Federated Hermes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Piper Sandler Companies	14.51%	21.92%	14.60%
Federated Hermes	21.30%	34.03%	18.54%

Summary

Federated Hermes beats Piper Sandler Companies on 11 of the 18 factors compared between the two stocks.

About Piper Sandler Companies

Piper Sandler Companies operates as an investment bank and institutional securities firm that serves corporations, private equity groups, public entities, non-profit entities, and institutional investors in the United States and internationally. The company offers investment banking and institutional sales, trading, and research services for various equity and fixed income products. It provides advisory services, such as mergers and acquisitions, equity private placements, and debt and restructuring advisory; raises capital through equity and debt financings; underwrites municipal issuances; and offers municipal financial advisory and loan placement services, as well as various over-the-counter derivative products. The company also offers public finance investment banking services that focus on state and local governments, and cultural and social service non-profit entities, as well as the education, healthcare, hospitality, senior living, and transportation sectors. In addition, it provides equity and fixed income advisory and trade execution services for institutional investors, and government and non-profit entities. Further, the company is involved in the alternative asset management funds merchant banking and healthcare to invest firm capital and to manage capital from outside investors, as well as trading activities. The company was formerly known as Piper Jaffray Companies and changed its name to Piper Sandler Companies in January 2020. Piper Sandler Companies was founded in 1895 and is headquartered in Minneapolis, Minnesota.

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.