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

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

Insider and Institutional Ownership

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

Profitability

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

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

Dividends

Sprott pays an annual dividend of $1.60 per share and has a dividend yield of 1.7%. Federated Hermes pays an annual dividend of $1.36 per share and has a dividend yield of 2.7%. 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 pays out 28.4% of its earnings in the form of a dividend. Sprott has increased its dividend for 1 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 longer track record of dividend growth.

Volatility & Risk

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sprott	$178.65 million	13.31	$49.29 million	$1.95	47.27
Federated Hermes	$1.63 billion	2.42	$268.31 million	$4.79	10.62

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.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Sprott and Federated Hermes, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sprott	0	1	3	0	2.75
Federated Hermes	0	5	3	1	2.56

Federated Hermes has a consensus price target of $49.67, suggesting a potential downside of 2.33%. Given Federated Hermes’ higher possible upside, analysts plainly believe Federated Hermes is more favorable than Sprott.

Summary

Federated Hermes beats Sprott on 11 of the 17 factors compared between the two stocks.

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.

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.