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Houlihan Lokey Inc. (HLI)
:HLI
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Houlihan Lokey
(NYSE:HLI)
Rating:79Outperform
Price Target:
$198.00
▲(15.53%Upside)
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
$11.96B
Dividend Yield1.4%
Average Volume (3M)336.52K
Price to Earnings (P/E)29.4
Beta (1Y)0.98
Revenue Growth24.88%
EPS Growth39.55%
CountryUS
Employees2,601
SectorFinancial
Sector Strength73
IndustryFinancial - Capital Markets
Share Statistics
EPS (TTM)1.96
Shares Outstanding53,789,856
10 Day Avg. Volume285,723
30 Day Avg. Volume336,519
Financial Highlights & Ratios
PEG Ratio-0.54
Price to Book (P/B)3.40
Price to Sales (P/S)0.00
P/FCF Ratio64.80
Enterprise Value/Market Cap0.43
Enterprise Value/Revenue0.59
Enterprise Value/Gross Profit6.27
Enterprise Value/Ebitda2.68
Forecast
1Y Price Target
$180.33Price Target Upside5.22% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Houlihan Lokey Business Overview & Revenue Model
Company DescriptionHoulihan Lokey, Inc. is a global investment bank that provides a wide range of financial services. The company operates across several sectors, including corporate finance, financial restructuring, and financial advisory services. Houlihan Lokey is renowned for its expertise in mergers and acquisitions, capital markets, and valuation services. With a strong focus on delivering strategic advice and solutions, the firm serves a diverse clientele, including corporations, institutions, and governments.
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: 4.74%|
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
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.85
Very Positive
Balance Sheet
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.78
Positive
Cash Flow
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.82
Very Positive
| Breakdown | ||||
| Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| 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
Neutral
171.39
Price Trends
165.79
Positive
167.97
Positive
168.65
Positive
Market Momentum
1.57
Positive
47.34
Neutral
38.00
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HLI, the sentiment is Neutral. The current price of 171.39 is below the 20-day moving average (MA) of 174.87, above the 50-day MA of 165.79, and above the 200-day MA of 168.65, indicating a neutral trend. The MACD of 1.57 indicates Positive momentum. The RSI at 47.34 is Neutral, neither overbought nor oversold. The STOCH value of 38.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 |
|---|---|---|---|---|---|---|---|
79 Outperform | $11.96B | 29.44 | 19.93% | 1.40% | 24.88% | 39.55% | |
74 Outperform | $5.27B | 26.54 | 96.33% | 0.66% | 16.04% | 60.32% | |
74 Outperform | $9.28B | 23.00 | 29.73% | 1.40% | 26.88% | 68.65% | |
72 Outperform | $9.80B | 18.18 | 11.48% | 1.93% | 12.85% | 20.21% | |
71 Outperform | $4.06B | 15.05 | 59.68% | 4.64% | 9.54% | ― | |
67 Neutral | $10.77B | 18.09 | 6.38% | 3.06% | 16.62% | 139.24% | |
64 Neutral | $12.77B | 9.71 | 7.85% | 78.05% | 12.07% | -7.97% |
* Financial Sector Average
Performance Comparison
HLI
Houlihan Lokey
171.39
42.14
32.60%
EVR
Evercore Partners
240.12
42.41
21.45%
JEF
Jefferies
52.20
8.31
18.93%
LAZ
Lazard
43.14
7.74
21.86%
SF
Stifel Financial
95.37
16.80
21.38%
PJT
PJT Partners
150.81
48.04
46.75%
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
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.