Houlihan Lokey (HLI) AI Stock Analysis

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Houlihan Lokey

(NYSE:HLI)

Rating:79Outperform

Price Target:

$198.00

▲(12.54%Upside)

Houlihan Lokey's overall stock score is driven by strong financial performance and positive earnings call sentiment, indicating robust growth and strategic success. Technical indicators suggest moderate bullish momentum, but the valuation appears somewhat stretched, which modestly impacts the overall attractiveness of the stock.

Positive Factors

Business Growth

Capital Solutions had a record year and is 'really growing' into a significant contributor with approximately 40 MDs.

Earnings

HLI delivered a high quality 21% adj. EPS beat across the board on Corporate Finance, Restructuring, and Financial & Valuation Advisory.

Negative Factors

Market Conditions

Restructuring contribution is anticipated to remain a bit more resilient than was suggested a year ago.

Operational Efficiency

Noncomp ratio of 13.1% is HLI's most efficient in nearly 3 years.

Houlihan Lokey (HLI) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$12.36B

Dividend Yield1.29%

Average Volume (3M)345.03K

Price to Earnings (P/E)30.4

Beta (1Y)0.97

Revenue Growth24.88%

EPS Growth39.55%

CountryUS

Employees2,601

SectorFinancial

Sector Strength81

IndustryFinancial - Capital Markets

Share Statistics

EPS (TTM)1.96

Shares Outstanding53,789,856

10 Day Avg. Volume311,022

30 Day Avg. Volume345,031

Financial Highlights & Ratios

PEG Ratio2.76

Price to Book (P/B)5.36

Price to Sales (P/S)0.00

P/FCF Ratio15.18

Enterprise Value/Market Cap0.95

Enterprise Value/Revenue1.34

Enterprise Value/Gross Profit14.17

Enterprise Value/Ebitda6.05

Forecast

1Y Price Target

$180.33

Price Target Upside2.50% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

Houlihan Lokey Business Overview & Revenue Model

Company DescriptionHoulihan Lokey, Inc., an investment banking company, provides merger and acquisition (M&A), capital market, financial restructuring, and financial and valuation advisory services worldwide. It operates in three segments: Corporate Finance, Financial Restructuring, and Financial and Valuation Advisory. The Corporate Finance segment offers general financial advisory services; and advises public and private institutions on buy-side and sell-side transactions, leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, as well as advise financial sponsors on various transactions. The Financial Restructuring segment advises debtors, creditors, and other parties-in-interest related to recapitalization/deleveraging transactions. It also provides a range of advisory services, including structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. The Financial and Valuation Advisory segment offers valuations of various assets, such as companies, illiquid debt and equity securities, and intellectual property. It also provides fairness opinions in connection with M&A and other transactions, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations; and other types of financial opinions. In addition, this segment offers dispute resolution services. It serves corporations, institutions, and governments. The company was incorporated in 1972 and is headquartered in Los Angeles, California with offices in the United States, Europe, the Middle East, and the Asia-Pacific region.

How the Company Makes MoneyHoulihan Lokey generates revenue through a variety of financial services, primarily focusing on advisory fees. In its corporate finance segment, the company earns fees by advising on mergers and acquisitions, capital raising, and other strategic transactions. The financial restructuring segment generates income by assisting clients with distressed debt situations, including out-of-court restructurings and bankruptcy proceedings. In its financial advisory services, Houlihan Lokey provides valuation opinions and financial consulting, which also contribute to its revenue. The firm partners with corporations, investment funds, and other institutions, leveraging its expertise to drive successful transactions and solutions that enhance their financial positions.

Houlihan Lokey Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q4-2025)

% Change Since: 7.52%|

Next Earnings Date:Aug 05, 2025

Earnings Call Sentiment Positive

Houlihan Lokey's earnings call highlighted record revenue achievements and strategic growth through acquisitions, tempered by market volatility impacting forecasting and increased expenses. Overall, the strong performance in revenue and growth metrics suggests optimism, despite challenges in forecasting and managing costs.

Q4-2025 Updates

Positive Updates

Record Annual Revenue

Houlihan Lokey reported $2.4 billion in annual revenue for fiscal year 2025, marking the highest in the firm's history with a 25% increase compared to the previous year.

Strong Fourth Quarter Performance

Fourth-quarter revenues reached $666 million, a 28% increase from the same quarter last year, with adjusted earnings per share up by 54%.

Corporate Finance Growth

Corporate Finance revenues increased by 44% to $413 million in the fourth quarter compared to the same period last year, with closed transactions up from 121 to 147.

Acquisition Strategy Success

Closed three acquisitions in fiscal year 2025, significantly expanding industry, geographic, and product reach, contributing to record revenues in financial restructuring and advisory.

Capital Markets Business Rebranding

The Capital Markets business was rebranded to Capital Solutions, highlighting its strategic importance, contributing to diversified, high-growth, and less volatile revenues.

Increased Dividend

The Board approved a 5.3% increase to the quarterly dividend, raising it to $0.60 per share.

Negative Updates

Volatility and Uncertainty in Forecasting

Current market volatility makes meaningful forecasting difficult, impacting the ability to predict near-term financial performance.

Seasonality in Corporate Finance

Corporate Finance exhibited typical seasonality with a slight decline in revenues compared to the third quarter, with expectations for similar patterns in fiscal year 2026.

Increased Expenses

Adjusted compensation expenses rose to $410 million from $320 million the previous year, and adjusted non-compensation expenses increased to $85 million from $81 million.

Company Guidance

During Houlihan Lokey's Q4 and fiscal year 2025 earnings call, the company reported revenues of $666 million for the quarter, marking a 28% increase from the prior year, and adjusted earnings per share of $1.96, up 54% year-over-year. For the full fiscal year, the firm achieved a record $2.4 billion in revenues, up 25% from the previous year. Key growth drivers included strong performances in financial restructuring, financial and valuation advisory, and the rebranded Capital Solutions business. The company closed 147 transactions in Q4 within Corporate Finance, a 21% increase from the previous year. Financial Restructuring revenues rose by 6% year-over-year, while Financial and Valuation Advisory saw a 15% increase in revenue. Expenses were also outlined, with adjusted compensation expenses for the quarter at $410 million and non-compensation expenses growing to $85 million. The adjusted effective tax rate decreased to 24.5% from 29.9% in the same quarter last year. The company ended the fiscal year with $1.2 billion in unrestricted cash and equivalents, and the board approved a 5.3% increase in the quarterly dividend to $0.60 per share.

Houlihan Lokey Financial Statement Overview

Summary

Houlihan Lokey exhibits strong financial health with robust revenue and profit growth, efficient cost management, and impressive cash flow generation. The balance sheet reflects low leverage and high equity, providing financial stability.

Income Statement

Very Positive

Houlihan Lokey has demonstrated strong revenue growth with a 24.8% increase in the latest year, supported by improvements in both gross profit and net profit margins. The EBIT and EBITDA margins have also shown resilience, indicating effective operational management. Overall, the income statement reflects robust financial performance with consistent profitability.

Balance Sheet

Positive

The balance sheet presents a solid equity base with an equity ratio of 56.9%, indicating financial stability. The company maintains a manageable debt-to-equity ratio of 0.2, suggesting low leverage and reduced financial risk. Return on Equity is healthy at 18.4%, demonstrating effective use of shareholder equity to generate profits. The balance sheet is strong, though there's room for optimizing asset utilization.

Cash Flow

Very Positive

Cash flow analysis reveals a significant improvement in operating cash flow, which outpaced net income, indicating robust cash-generating capability. The free cash flow grew substantially by 209% over the prior year, highlighting excellent cash management. The free cash flow to net income ratio is 2.0, reflecting ample cash available after capital expenditures. The cash flow position is strong and supports ongoing investments and financial flexibility.

Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
2.39B	1.91B	1.81B	2.27B	1.53B
	Gross Profit
919.92M	737.05M	696.64M	861.32M	554.26M
	EBIT
501.54M	362.86M	341.74M	612.86M	408.16M
	EBITDA
572.61M	391.40M	435.03M	661.40M	446.14M
	Net Income Common Stockholders
399.71M	280.30M	254.22M	437.75M	312.77M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.14B	728.80M	720.69M	833.70M	846.85M
	Total Assets
3.82B	3.17B	2.97B	2.89B	2.43B
	Total Debt
438.19M	415.41M	374.87M	197.63M	175.33M
	Net Debt
-532.82M	-305.82M	-339.57M	-636.07M	-671.52M
	Total Liabilities
1.64B	1.33B	1.36B	1.44B	1.04B
	Stockholders Equity
2.17B	1.84B	1.61B	1.44B	1.38B
Cash Flow		Free Cash Flow
808.91M	261.73M	85.54M	727.92M	565.69M
	Operating Cash Flow
848.61M	328.46M	136.27M	736.60M	579.84M
	Investing Cash Flow
-265.06M	-70.41M	-3.00M	-273.91M	-99.75M
	Financing Cash Flow
-329.07M	-250.59M	-240.46M	-459.06M	-26.82M

Houlihan Lokey Technical Analysis

Technical Analysis Sentiment

Positive

Last Price175.94

Price Trends

50DMA

165.15

Positive

100DMA

168.17

Positive

200DMA

168.32

Positive

Market Momentum

MACD

2.26

Positive

RSI

53.90

Neutral

STOCH

63.96

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HLI, the sentiment is Positive. The current price of 175.94 is above the 20-day moving average (MA) of 175.57, above the 50-day MA of 165.15, and above the 200-day MA of 168.32, indicating a neutral trend. The MACD of 2.26 indicates Positive momentum. The RSI at 53.90 is Neutral, neither overbought nor oversold. The STOCH value of 63.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
HLI	79 Outperform	$12.36B	30.42	19.93%	1.29%	24.88%	39.55%
PJT	75 Outperform	$5.39B	27.14	96.33%	0.65%	16.04%	60.32%
EVR	74 Outperform	$9.49B	23.51	29.73%	1.32%	26.88%	68.65%
LAZ	70 Outperform	$4.23B	15.66	59.68%	4.55%	9.54%	―
SF	69 Neutral	$9.92B	18.40	11.48%	1.78%	12.85%	20.21%
JEF	67 Neutral	$10.81B	18.16	6.38%	2.86%	16.62%	139.24%
Sector *	64 Neutral	$12.86B	9.79	7.78%	16985.65%	12.28%	-7.82%

* Financial Sector Average

Performance Comparison

HLI

Houlihan Lokey

174.08

48.48

38.60%

EVR

Evercore Partners

244.50

53.94

28.31%

JEF

Jefferies

52.70

10.49

24.85%

LAZ

Lazard

42.71

6.37

17.53%

Stifel Financial

96.62

19.40

25.12%

PJT

PJT Partners

155.18

53.37

52.42%

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.