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Houlihan Lokey Inc. (HLI)
:HLI

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)

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
85
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
78
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
82
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.
Breakdown
Mar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income StatementTotal Revenue
2.39B1.91B1.81B2.27B1.53B
Gross Profit
919.92M737.05M696.64M861.32M554.26M
EBIT
501.54M362.86M341.74M612.86M408.16M
EBITDA
572.61M391.40M435.03M661.40M446.14M
Net Income Common Stockholders
399.71M280.30M254.22M437.75M312.77M
Balance SheetCash, Cash Equivalents and Short-Term Investments
1.14B728.80M720.69M833.70M846.85M
Total Assets
3.82B3.17B2.97B2.89B2.43B
Total Debt
438.19M415.41M374.87M197.63M175.33M
Net Debt
-532.82M-305.82M-339.57M-636.07M-671.52M
Total Liabilities
1.64B1.33B1.36B1.44B1.04B
Stockholders Equity
2.17B1.84B1.61B1.44B1.38B
Cash FlowFree Cash Flow
808.91M261.73M85.54M727.92M565.69M
Operating Cash Flow
848.61M328.46M136.27M736.60M579.84M
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
HLHLI
79
Outperform
$12.36B30.4219.93%1.29%24.88%39.55%
PJPJT
75
Outperform
$5.39B27.1496.33%0.65%16.04%60.32%
EVEVR
74
Outperform
$9.49B23.5129.73%1.32%26.88%68.65%
LALAZ
70
Outperform
$4.23B15.6659.68%4.55%9.54%
SFSF
69
Neutral
$9.92B18.4011.48%1.78%12.85%20.21%
JEJEF
67
Neutral
$10.81B18.166.38%2.86%16.62%139.24%
64
Neutral
$12.86B9.797.78%16985.65%12.28%-7.82%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
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%
SF
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.