Houlihan Lokey (HLI) AI Stock Analysis

• Market Cap: $10.61B
• Dividend Yield: 1.51%
• Average Volume (3M): 488.28K
• Price to Earnings (P/E): 28.9
• Beta (1Y): 0.99
• Revenue Growth: 22.09%
• EPS Growth: 28.37%
• Country: US
• Employees: 2,601
• Sector: Financial
• Sector Strength: 86
• Industry: Financial - Capital Markets
• EPS (TTM): 5.24
• Shares Outstanding: 54,026,363
• 10 Day Avg. Volume: 603,807
• 30 Day Avg. Volume: 488,281
• PEG Ratio: 1.02
• Price to Book (P/B): N/A
• Price to Sales (P/S): 5.09
• Price to Cash Flow (P/CF): 10.70
• P/FCF Ratio: 10.20
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $176.40
• Price Target Upside: 16.67% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

Houlihan Lokey's robust financial performance and positive earnings call highlight significant strengths, particularly in revenue and profit growth. However, technical indicators suggest caution due to some bearish signals and a relatively high P/E ratio indicating potential overvaluation. Overall, the stock presents a balanced risk-reward profile, supported by long-term stability and growth potential.

Positive Factors

Corporate Finance

Strong revenue beat in Corporate Finance (+36% y/y), RX (+2% y/y) and FVA (+14% y/y).

Financial Performance

HLI delivered a high quality 9% adj. EPS beat across the board, beating revenue estimates across Corporate Finance, Restructuring and Financial & Valuation Advisory.

Negative Factors

External Business Conditions

Despite positive momentum in deal activity, external factors could influence business conditions.

Tax Impact

The adjusted tax rate was negatively impacted due to increased state taxes and increased taxes on foreign operations.

Houlihan Lokey Business Overview & Revenue Model

Company Description

Houlihan 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 Money

Houlihan 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 exhibits strong financial health across all major verticals. The company has demonstrated consistent revenue and profit growth, maintains a debt-free balance sheet, and generates substantial cash flows. These factors position it well within the capital markets industry, offering 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.

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.

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.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
2.24B	1.91B	1.81B	2.27B	1.53B	1.16B
	Gross Profit
660.53M	700.82M	661.57M	861.32M	554.26M	421.61M
	EBIT
474.48M	362.86M	341.74M	612.86M	408.16M	229.60M
	EBITDA
526.82M	391.40M	426.57M	692.91M	446.14M	271.55M
	Net Income Common Stockholders
358.87M	280.30M	254.22M	437.75M	312.77M	183.79M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
902.88M	728.80M	714.44M	833.70M	846.85M	380.37M
	Total Assets
3.48B	3.17B	2.97B	2.89B	2.43B	1.68B
	Total Debt
433.03M	415.41M	374.87M	197.63M	175.33M	158.89M
	Net Debt
-799.34M	-305.82M	-339.57M	-636.07M	-671.52M	-221.48M
	Total Liabilities
1.40B	1.33B	1.34B	1.44B	1.04B	692.62M
	Stockholders Equity
2.08B	1.84B	1.63B	1.44B	1.38B	984.38M
Cash Flow		Free Cash Flow
678.09M	261.73M	85.54M	727.92M	565.69M	266.95M
	Operating Cash Flow
715.54M	328.46M	136.27M	736.60M	579.84M	287.67M
	Investing Cash Flow
-173.40M	-70.41M	-3.00M	-273.91M	-99.75M	-33.14M
	Financing Cash Flow
-274.13M	-250.59M	-240.46M	-459.06M	-26.82M	-152.14M

Houlihan Lokey Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 151.20
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HLI, the sentiment is Negative. The current price of 151.2 is below the 20-day moving average (MA) of 158.24, below the 50-day MA of 166.01, and below the 200-day MA of 163.69, indicating a bearish trend. The MACD of -1.80 indicates Negative momentum. The RSI at 49.23 is Neutral, neither overbought nor oversold. The STOCH value of 42.24 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HLI.

Houlihan Lokey Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EVR	78 Outperform	$6.84B	19.25	23.03%	1.83%	22.67%	47.20%
HLI	77 Outperform	$10.61B	28.88	18.64%	1.51%	22.09%	28.37%
PJT	76 Outperform	$5.03B	26.33	62.26%	0.77%	29.48%	63.03%
LAZ	72 Outperform	$3.12B	12.94	51.51%	5.77%	23.88%	―
SF	71 Outperform	$8.32B	12.82	13.32%	2.09%	15.33%	46.64%
Sector *	64 Neutral	$13.21B	9.26	9.39%	4.87%	16.14%	-8.87%
JEF	60 Neutral	$8.82B	14.82	6.38%	3.27%	16.62%	139.24%

Houlihan Lokey Corporate Events

Houlihan Lokey Revises Incentive Award Plan Shares

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.