Houlihan Lokey, Inc. (HLI) Stock Analysis

Why this analysis is different

• A sector-relative MoonshotScore — five pillars (business quality, financial safety, valuation, growth durability, momentum) re-ranked nightly against the full universe of US-listed common stocks.
• An AI Council read across up to eight perspectives — value, macro, quantitative, and momentum lenses — that shows where they disagree instead of averaging the tension away.
• Figures come straight from FMP and Yahoo Finance filings data. The AI writes the narrative around the numbers — it never edits the numbers.

Houlihan Lokey, Inc. (HLI) Financial Services Profile

Houlihan Lokey, Inc. is a global investment bank providing M&A, restructuring, and valuation advisory services. With a strong presence in the US, Europe, and Asia-Pacific, the firm advises corporations, institutions, and governments, differentiating itself through specialized expertise and a focus on complex financial transactions, reflected in its 16.3% profit margin.

What Is the Investment Thesis for HLI?

The company's diversified service offerings across Corporate Finance, Financial Restructuring, and Financial and Valuation Advisory segments provide resilience across economic cycles. With a market capitalization of $9.50B and a P/E ratio of 22.33, the company's valuation reflects its strong market position. A key growth catalyst is the increasing demand for restructuring services amid potential economic volatility. The company's global presence and established relationships with corporations, institutions, and governments further solidify its long-term growth potential. The dividend yield of 1.57% provides a steady return for investors. However, potential risks include increased competition and fluctuations in M&A activity.

Based on FMP financials and quantitative analysis

HLI Key Highlights

Market Cap of $9.50B indicates a strong market valuation and investor confidence.

• P/E ratio of 22.33 reflects investor expectations of future earnings growth.
• Profit Margin of 16.3% demonstrates efficient operations and profitability.
• Gross Margin of 51.9% showcases the company's ability to maintain pricing power and manage costs effectively.
• Dividend Yield of 1.57% provides a steady income stream for investors.

Who Are HLI's Competitors?

HLI is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are HLI's Key Strengths?

Leading position in financial restructuring.

• Strong brand reputation and expertise.
• Diversified service offerings.
• Global presence.

What Are HLI's Weaknesses?

Reliance on economic cycles.

• Potential for increased competition.
• Dependence on key personnel.
• Sensitivity to regulatory changes.

What Could Drive HLI Stock Higher?

Increased M&A activity driven by corporate consolidation.

• Demand for restructuring services amid economic uncertainty.
• Potential for strategic acquisitions to expand service offerings.
• Expansion in emerging markets, particularly in Asia-Pacific.

What Are the Key Risks for HLI?

Rich valuation — a P/E of 22.33 runs well above the Financial Services sector’s ~17.50x, leaving little room for a miss.

• Economic downturns impacting M&A and restructuring activity.
• Increased competition from other investment banks.
• Regulatory changes affecting financial services industry.
• Geopolitical risks impacting global markets.
• Dependence on key personnel for revenue generation.

What Are the Growth Opportunities for HLI?

• Expansion in Restructuring Services: Houlihan Lokey can capitalize on increased demand for restructuring services during economic downturns. The global restructuring market is estimated to be worth billions of dollars annually, with potential for significant growth as companies seek to navigate financial distress. By leveraging its expertise and reputation in restructuring, Houlihan Lokey can secure a larger share of this market, driving revenue growth and enhancing its market position. This is an ongoing opportunity, with potential for immediate and long-term impact.
• Strategic Acquisitions: Houlihan Lokey can pursue strategic acquisitions to expand its service offerings and geographic reach. Identifying and acquiring complementary businesses in high-growth areas, such as technology or healthcare, can diversify its revenue streams and enhance its competitive advantage. The timeline for acquisitions depends on market conditions and available opportunities, but strategic acquisitions can provide a significant boost to growth within 1-3 years. The M&A advisory market is expected to continue growing, presenting numerous acquisition targets.
• Increased Focus on Private Capital Markets: Houlihan Lokey can further penetrate the private capital markets, advising private equity firms and other institutional investors on transactions. The private capital markets are experiencing rapid growth, with increasing amounts of capital being deployed in private companies. By expanding its presence in this market, Houlihan Lokey can tap into a new source of revenue and diversify its client base. This is an ongoing opportunity, with potential for steady growth over the next 3-5 years.
• Geographic Expansion in Asia-Pacific: Houlihan Lokey can expand its presence in the Asia-Pacific region, capitalizing on the region's rapid economic growth and increasing demand for financial advisory services. The Asia-Pacific region is expected to be a major driver of global economic growth in the coming years, presenting significant opportunities for financial services firms. By establishing a stronger presence in key markets, such as China and India, Houlihan Lokey can tap into a new source of revenue and enhance its global footprint. This expansion could unfold over the next 5-7 years.
• Leveraging Technology and Data Analytics: Houlihan Lokey can invest in technology and data analytics to enhance its service offerings and improve its efficiency. By leveraging data analytics, the company can provide more insightful advice to its clients and make better-informed decisions. Investing in technology can also streamline its operations and reduce costs. This is an ongoing opportunity, with potential for continuous improvement and innovation over the long term. The financial services industry is increasingly reliant on technology, making this a crucial area for investment.

What Are HLI's Competitive Advantages?

• Strong reputation and brand recognition in restructuring.
• Specialized expertise in complex financial transactions.
• Long-standing relationships with corporations and institutions.
• Global presence with offices in key financial centers.

What Does HLI Do?

Houlihan Lokey, Inc. was founded in 1972 and has grown into a leading global investment bank with expertise in mergers and acquisitions (M&A), financial restructuring, and financial and valuation advisory services. Headquartered in Los Angeles, California, the firm operates across the United States, Europe, the Middle East, and the Asia-Pacific region. Houlihan Lokey serves a diverse clientele, including corporations, institutions, and governments. Its services are divided into three primary segments: Corporate Finance, Financial Restructuring, and Financial and Valuation Advisory. The Corporate Finance segment advises on buy-side and sell-side transactions, leveraged loans, and capital markets activities. The Financial Restructuring segment focuses on advising debtors, creditors, and other stakeholders in recapitalization and deleveraging situations. The Financial and Valuation Advisory segment provides valuation services for various assets, fairness opinions, and dispute resolution services. Houlihan Lokey's evolution has been marked by a commitment to providing specialized financial expertise, particularly in complex and challenging situations. This focus has allowed it to establish a strong reputation and a leading position in its chosen markets.

What Products and Services Does HLI Offer?

• Provides merger and acquisition (M&A) advisory services.
• Offers capital markets advisory, including debt and equity financing.
• Specializes in financial restructuring for distressed companies.
• Delivers financial and valuation advisory services for various assets.
• Advises on buy-side and sell-side transactions.
• Provides fairness opinions in connection with M&A transactions.
• Offers solvency opinions in connection with corporate spin-offs.
• Provides dispute resolution services.

How Does HLI Make Money?

• Generates revenue through fees for M&A advisory services.
• Earns fees from financial restructuring engagements.
• Receives fees for providing valuation and fairness opinions.
• Charges fees for capital markets advisory services.

What Industry Does HLI Operate In?

Houlihan Lokey operates in the financial services industry, specifically within the capital markets segment. The industry is characterized by intense competition and cyclical fluctuations influenced by economic conditions and market sentiment. Trends include increasing globalization of financial transactions and growing demand for specialized advisory services. Houlihan Lokey differentiates itself through its focus on restructuring and valuation advisory, positioning it to capitalize on opportunities arising from market volatility and corporate transformations. Competitors include firms like Evercore Inc. (EVR) and Stifel Financial Corp. (SF), each vying for market share in M&A and financial advisory.

Who Are HLI's Key Customers?

• Corporations seeking M&A advisory.
• Debtors and creditors involved in restructuring.
• Private equity firms.
• Institutions requiring valuation services.
• Governments.

Over the past six months, Houlihan Lokey, Inc. insiders filed 30 SEC Form 4 transactions — 15 sales and 15 purchases. On net that is roughly 48K shares disposed (about $513K), a signal worth weighing alongside the fundamentals.

Quarterly Financial Performance: Houlihan Lokey, Inc.

Revenue for Houlihan Lokey, Inc. came in at $511.0M during Q1 FY2027, a 19.6% contraction versus the preceding quarter. The company recorded net income of $78.0M, with diluted EPS of $1.15. Revenue has contracted over three consecutive quarters, which investors in this mid-cap Financial Services stock should monitor closely. Across the four most recent quarters, HLI averaged $1.49 in diluted EPS.

HLI Valuation & Market Position

With a $9.50B market cap, Houlihan Lokey, Inc. sits in the mid-cap segment of the market. Analyst price targets span from $145.00 to $187.00, with a consensus of $163.60. At the current price of $135.97, that implies approximately 20% upside potential. Relative to its peer group, HLI's quantitative score of 58/100 is below the peer average of 71/100.

Return on equity for Houlihan Lokey, Inc. stands at 18.8%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 9.9%, showing how much profit it generates from its asset base. HLI trades at a trailing price-to-earnings ratio of 22.33, above the Financial Services sector average of ~17.50x. Its free cash flow yield is 7.1%, a gauge of the cash the business throws off relative to its market value. A current ratio of 1.53 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is 4.6%, the inverse of the P/E and a quick read on earnings relative to price.

Houlihan Lokey, Inc.'s Piotroski F-Score is 4/9, a 9-point checklist of profitability, leverage and efficiency — a middling fundamental profile. Its Altman Z-Score of 6.12 places it in the safe zone, indicating low near-term bankruptcy risk.

Houlihan Lokey, Inc. has beaten Wall Street's EPS estimate in 6 of its last 8 reported quarters — a consistent record of delivering on expectations. Reported results have landed about 7.1% above estimates on average.

Company Profile

Houlihan Lokey, Inc. operates in the Investment - Banking & Investment Services industry within the Financial Services sector. It is headquartered in Los Angeles, US. The company is led by CEO Scott Joseph Adelson. HLI has traded publicly since 2015.

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Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

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