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Houlihan Lokey (HLI)
NYSE:HLI
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Houlihan Lokey
(NYSE:HLI)
80Outperform
Positive Factors
Acquisitions
Acquisition of PSL boosts FVA tech stack and expands client base in the UK.
Corporate Finance
Corporate Finance revenues increased significantly, driven by an uptick in closed transactions and average transaction fees.
Earnings
Houlihan Lokey reported adjusted operating EPS ahead of estimates, showcasing strong financial performance.
Negative Factors
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
$11.68B
Dividend Yield1.37%
Average Volume (3M)446.79K
Price to Earnings (P/E)31.8
Beta (1Y)0.99
Revenue Growth22.09%
EPS Growth28.37%
CountryUS
Employees2,601
SectorFinancial
Sector Strength88
IndustryFinancial - Capital Markets
Share Statistics
EPS (TTM)5.24
Shares Outstanding54,026,363
10 Day Avg. Volume299,589
30 Day Avg. Volume446,791
Financial Highlights & Ratios
PEG Ratio1.12
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap0.99
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit16.51
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$173.67Price Target Upside4.30% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
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 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 demonstrates robust financial health with strong profitability, a debt-free balance sheet, and substantial cash flows. The company shows consistent revenue and profit growth, indicating 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 | ||||
| Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.91B | 1.81B | 2.27B | 1.53B | 1.16B | Gross Profit |
| 700.82M | 661.57M | 861.32M | 554.26M | 421.61M | EBIT |
| 362.86M | 341.74M | 612.86M | 408.16M | 229.60M | EBITDA |
| 391.40M | 426.57M | 692.91M | 446.14M | 271.55M | Net Income Common Stockholders |
| 280.30M | 254.22M | 437.75M | 312.77M | 183.79M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 728.80M | 714.44M | 833.70M | 846.85M | 380.37M | Total Assets |
| 3.17B | 2.97B | 2.89B | 2.43B | 1.68B | Total Debt |
| 415.41M | 374.87M | 197.63M | 175.33M | 158.89M | Net Debt |
| -305.82M | -339.57M | -636.07M | -671.52M | -221.48M | Total Liabilities |
| 1.33B | 1.34B | 1.44B | 1.04B | 692.62M | Stockholders Equity |
| 1.84B | 1.63B | 1.44B | 1.38B | 984.38M |
| Cash Flow | Free Cash Flow | |||
| 261.73M | 85.54M | 727.92M | 565.69M | 266.95M | Operating Cash Flow |
| 328.46M | 136.27M | 736.60M | 579.84M | 287.67M | Investing Cash Flow |
| -70.41M | -3.00M | -273.91M | -99.75M | -33.14M | Financing Cash Flow |
| -250.59M | -240.46M | -459.06M | -26.82M | -152.14M |
Houlihan Lokey Technical Analysis
Positive
166.51
Price Trends
159.73
Positive
168.56
Negative
165.24
Positive
Market Momentum
1.18
Negative
61.02
Neutral
89.98
Negative
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 166.51 is above the 20-day moving average (MA) of 154.98, above the 50-day MA of 159.73, and above the 200-day MA of 165.24, indicating a bullish trend. The MACD of 1.18 indicates Negative momentum. The RSI at 61.02 is Neutral, neither overbought nor oversold. The STOCH value of 89.98 is Negative, 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 |
|---|---|---|---|---|---|---|---|
80 Outperform | $11.68B | 31.81 | 18.64% | 1.37% | 22.09% | 28.37% | |
78 Outperform | $8.36B | 20.45 | 23.03% | 1.50% | 26.88% | 68.65% | |
75 Outperform | $5.01B | 25.27 | 62.26% | 0.70% | 16.04% | 60.32% | |
70 Outperform | $3.72B | 14.43 | 59.68% | 4.83% | 9.54% | ― | |
69 Neutral | $9.21B | 17.06 | 13.32% | 1.92% | 12.85% | 20.21% | |
64 Neutral | $12.64B | 9.74 | 8.05% | 17044.60% | 12.66% | -4.62% | |
59 Neutral | $10.16B | 17.07 | 6.38% | 2.84% | 16.62% | 139.24% |
* Financial Sector Average
Performance Comparison
HLI
Houlihan Lokey
166.51
34.27
25.92%
EVR
Evercore Partners
213.63
22.94
12.03%
JEF
Jefferies
49.27
4.66
10.45%
LAZ
Lazard
41.39
2.72
7.03%
SF
Stifel Financial
89.41
7.69
9.41%
PJT
PJT Partners
143.51
44.91
45.55%
Houlihan Lokey Earnings Call Summary
Earnings Call Date:Jan 28, 2025
(Q3-2025)
| % Change Since: -9.24%|
Next Earnings Date:May 07, 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.Q3-2025 Updates
Positive Updates
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.
Negative Updates
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.