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Houlihan Lokey (HLI)
NYSE:HLI
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Houlihan Lokey
(NYSE:HLI)
77Outperform
Positive Factors
Earnings
HLI delivered a high quality 9% adj. EPS beat across the board, beating revenue estimates across Corporate Finance, Restructuring and Financial & Valuation Advisory.
Revenue Growth
Corporate Finance revenues increased significantly, driven by an uptick in closed transactions and average transaction fees.
Strategic Acquisitions
Acquisition of PSL boosts FVA tech stack and expands client base in the UK.
Negative Factors
External Business Conditions
Houlihan Lokey observes positive momentum in deal activity, despite external factors that could influence business conditions.
Taxation
The adjusted tax rate was negatively impacted due to increased state taxes and increased taxes on foreign operations.
Houlihan Lokey (HLI) vs. S&P 500 (SPY)
Market Cap
$11.09B
Dividend Yield1.43%
Average Volume (3M)385.43K
Price to Earnings (P/E)30.2
Beta (1Y)1.02
Revenue Growth22.09%
EPS Growth28.37%
CountryUS
Employees2,601
SectorFinancial
Sector Strength86
IndustryFinancial - Capital Markets
Share Statistics
EPS (TTM)5.24
Shares Outstanding54,026,363
10 Day Avg. Volume405,867
30 Day Avg. Volume385,427
Financial Highlights & Ratios
PEG Ratio1.06
Price to Book (P/B)N/A
Price to Sales (P/S)5.09
Price to Cash Flow (P/CF)10.70
P/FCF Ratio10.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$188.71Price Target Upside19.36% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Houlihan Lokey Business Overview & Revenue Model
Company DescriptionHoulihan Lokey, Inc. (HLI) is a leading global investment bank specializing in mergers and acquisitions, financial restructuring, valuation, and strategic consulting. The company operates across various sectors, including financial advisory, corporate finance, and financial restructuring, serving a diverse clientele ranging from corporations and financial sponsors to government agencies. Houlihan Lokey is renowned for its expertise in providing independent advice and solutions tailored to the complex financial needs of its clients.
How the Company Makes MoneyHoulihan Lokey generates revenue primarily through its advisory services in mergers and acquisitions (M&A), financial restructuring, and financial and valuation advisory. In its M&A segment, the company earns fees by advising clients on the buying and selling of businesses, capital raising, and other strategic transactions. The financial restructuring segment provides revenue through advisory services in distressed financial situations, helping clients negotiate with creditors and stakeholders. Additionally, the financial and valuation advisory segment contributes to revenue by offering services such as fairness opinions, financial opinions, and other valuation services. The company's revenue streams are bolstered by its strong reputation in the industry and its ability to execute complex transactions, often working with a diverse range of clients, including corporations, financial sponsors, and government agencies.
Houlihan Lokey Financial Statement Overview
Summary
Houlihan Lokey exhibits strong financial health with robust revenue and profit growth, a debt-free balance sheet, and substantial cash flows. These factors position it well within the capital markets industry, offering stability and growth potential.Income Statement
Houlihan Lokey shows strong profitability with a consistent gross profit margin of around 29% and a net profit margin of approximately 16% in the TTM (Trailing-Twelve-Months). Revenue growth has been robust, showing a notable increase from the previous year. EBIT and EBITDA margins are strong, demonstrating effective cost management and operational efficiency.85
Very Positive
Balance Sheet
The balance sheet is solid with no debt, providing financial stability and flexibility. The equity ratio is healthy at around 60%, indicating a strong capital structure. The return on equity is impressive, reflecting efficient use of shareholders' funds.90
Very Positive
Cash Flow
Cash flows are robust, with significant operating cash flow that exceeds net income, indicating strong cash generation capabilities. Free cash flow growth is positive, supporting potential reinvestment opportunities and shareholder returns.88
Very Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.24B | 1.91B | 1.81B | 2.27B | 1.53B | 1.16B | Gross Profit |
| 660.53M | 700.82M | 661.57M | 861.32M | 554.26M | 421.61M | EBIT |
| 474.48M | 362.86M | 341.74M | 612.86M | 408.16M | 229.60M | EBITDA |
| 526.82M | 391.40M | 426.57M | 692.91M | 446.14M | 271.55M | Net Income Common Stockholders |
| 358.87M | 280.30M | 254.22M | 437.75M | 312.77M | 183.79M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 902.88M | 728.80M | 714.44M | 833.70M | 846.85M | 380.37M | Total Assets |
| 3.48B | 3.17B | 2.97B | 2.89B | 2.43B | 1.68B | Total Debt |
| 433.03M | 415.41M | 374.87M | 197.63M | 175.33M | 158.89M | Net Debt |
| -799.34M | -305.82M | -339.57M | -636.07M | -671.52M | -221.48M | Total Liabilities |
| 1.40B | 1.33B | 1.34B | 1.44B | 1.04B | 692.62M | Stockholders Equity |
| 2.08B | 1.84B | 1.63B | 1.44B | 1.38B | 984.38M |
| Cash Flow | Free Cash Flow | ||||
| 678.09M | 261.73M | 85.54M | 727.92M | 565.69M | 266.95M | Operating Cash Flow |
| 715.54M | 328.46M | 136.27M | 736.60M | 579.84M | 287.67M | Investing Cash Flow |
| -173.40M | -70.41M | -3.00M | -273.91M | -99.75M | -33.14M | Financing Cash Flow |
| -274.13M | -250.59M | -240.46M | -459.06M | -26.82M | -152.14M |
Houlihan Lokey Technical Analysis
Negative
158.10
Price Trends
171.78
Negative
175.21
Negative
162.47
Negative
Market Momentum
-2.17
Negative
38.84
Neutral
39.80
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HLI, the sentiment is Negative. The current price of 158.1 is below the 20-day moving average (MA) of 161.08, below the 50-day MA of 171.78, and below the 200-day MA of 162.47, indicating a bearish trend. The MACD of -2.17 indicates Negative momentum. The RSI at 38.84 is Neutral, neither overbought nor oversold. The STOCH value of 39.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HLI.
Houlihan Lokey Risk Analysis
Houlihan Lokey disclosed 27 risk factors in its most recent earnings report. Houlihan Lokey reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Houlihan Lokey Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $11.09B | 30.20 | 18.64% | 1.43% | 22.09% | 28.37% | |
74 Outperform | $3.88B | 16.12 | 51.51% | 4.46% | 23.88% | ― | |
73 Outperform | $5.28B | 27.62 | 62.26% | 0.71% | 29.48% | 63.03% | |
73 Outperform | $8.03B | 23.37 | 23.03% | 1.60% | 22.67% | 47.20% | |
70 Outperform | $4.44B | 32.62 | 34.27% | 4.23% | 39.75% | ― | |
69 Neutral | $29.23B | 14.12 | 19.07% | 1.30% | 13.79% | 28.57% | |
64 Neutral | $14.24B | 10.18 | 8.97% | 4.28% | 16.38% | -12.00% |
* Financial Sector Average
Performance Comparison
HLI
Houlihan Lokey
158.10
31.74
25.12%
EVR
Evercore Partners
199.52
12.75
6.83%
LAZ
Lazard
43.17
3.97
10.13%
RJF
Raymond James Financial
139.01
11.84
9.31%
MC
Moelis
57.91
3.89
7.20%
PJT
PJT Partners
135.97
41.63
44.13%
Houlihan Lokey Earnings Call Summary
Earnings Call Date: Jan 28, 2025 | % Change Since: -13.82% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance in revenue and earnings growth, driven by success in Corporate Finance and Financial and Valuation Advisory segments. However, modest growth in Financial Restructuring and increased expenses somewhat balanced the positive aspects.Highlights
Strong Revenue and Earnings Growth
Revenues for the quarter were $634 million, a 24% increase from the same period last year. Adjusted earnings per share were $1.64, up 34%.
Corporate Finance Performance
Corporate Finance revenue for the quarter was $422 million, a 36% increase year-over-year. The segment closed 170 transactions, up from 117 in the previous year.
Financial and Valuation Advisory Growth
Financial and Valuation Advisory generated $82 million in revenue, marking a 14% increase from the previous year.
Successful Acquisitions and Hiring
Houlihan Lokey closed its acquisition of Waller Helms and added 17 new managing directors, 14 through acquisitions and 3 through hires.
Positive Outlook for Fiscal 2026
The company maintains an optimistic outlook for fiscal 2026, citing improving M&A market sentiment and increased private equity activity.
Lowlights
Modest Decrease in Average Transaction Fees
Despite an increase in the number of transactions, the average transaction fee in both Corporate Finance and Financial Restructuring decreased due to transaction mix.
Flat Growth in Financial Restructuring
Financial Restructuring produced $131 million in revenue, representing a modest 2% increase from the previous year.
Increased Adjusted Compensation Expenses
Adjusted compensation expenses rose to $390 million, up from $314 million in the previous year, attributed to deferred retention payments.
Higher Adjusted Effective Tax Rate
The adjusted effective tax rate for the quarter increased to 33.3%, up from 30.3% in the same period last year.
Company Guidance
During Houlihan Lokey's third-quarter fiscal 2025 earnings call, the company reported strong financial performance with revenues of $634 million, up 24% from the same period last year, and adjusted earnings per share of $1.64, a 34% increase. The Corporate Finance segment led growth with $422 million in revenues, a 36% increase, driven by improvements in M&A and financing markets, while Financial Restructuring and Financial and Valuation Advisory also reported revenue increases of 2% and 14%, respectively. The company closed 170 Corporate Finance transactions this quarter, up from 117 the previous year, despite a modest decrease in average transaction fees due to transaction mix. Adjusted compensation expenses totaled $390 million, with a compensation expense ratio of 61.5%, and non-compensation expenses slightly increased to $83 million. The adjusted effective tax rate was 33.3%, and the company held $903 million in unrestricted cash and equivalents. Houlihan Lokey remains optimistic about fiscal 2026, anticipating continued M&A market improvement and private equity activity growth.Houlihan Lokey Corporate Events
Other
Houlihan Lokey Revises Incentive Award Plan Shares
Neutral
Oct 28, 2024
Houlihan Lokey, Inc. has revised its 2016 Incentive Award Plan, reducing the available shares of common stock to 8 million, effective from October 24, 2024. The share count will further adjust on April 1, 2025, based on specific criteria, potentially impacting stock availability and market dynamics.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.