Analyzing Sprott (NYSE:SII) & Federated Hermes (NYSE:FHI)

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

Dividends

Federated Hermes pays an annual dividend of $1.36 per share and has a dividend yield of 2.6%. Sprott pays an annual dividend of $1.60 per share and has a dividend yield of 1.7%. Federated Hermes pays out 28.4% of its earnings in the form of a dividend. Sprott pays out 82.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federated Hermes has raised its dividend for 4 consecutive years and Sprott has raised its dividend for 1 consecutive years. Federated Hermes is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Federated Hermes and Sprott’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Federated Hermes	21.86%	33.03%	17.55%
Sprott	23.26%	15.01%	11.97%

Analyst Ratings

This is a summary of current ratings and price targets for Federated Hermes and Sprott, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Federated Hermes	0	6	3	0	2.33
Sprott	0	2	3	0	2.60

Federated Hermes presently has a consensus target price of $49.67, indicating a potential downside of 4.74%. Sprott has a consensus target price of $132.00, indicating a potential upside of 40.78%. Given Sprott’s stronger consensus rating and higher probable upside, analysts clearly believe Sprott is more favorable than Federated Hermes.

Earnings & Valuation

This table compares Federated Hermes and Sprott”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Federated Hermes	$1.74 billion	2.32	$268.31 million	$4.79	10.88
Sprott	$178.65 million	13.54	$49.29 million	$1.95	48.08

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

Institutional & Insider Ownership

75.9% of Federated Hermes shares are held by institutional investors. Comparatively, 28.3% of Sprott shares are held by institutional investors. 3.8% of Federated Hermes shares are held by insiders. Comparatively, 18.3% of Sprott shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Federated Hermes has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500. Comparatively, Sprott has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Summary

Federated Hermes beats Sprott on 9 of the 16 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 Sprott

Sprott Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides asset management, portfolio management, wealth management, fund management, and administrative and consulting services to its clients. It offers mutual funds, hedge funds, and offshore funds, along with managed accounts. Further, the firm also provides broker-dealer activities. Sprott Inc. was formed on February 13, 2008 and is based in Toronto, Canada.