Houlihan Lokey (HLI) is back in the spotlight after news highlighting its exceptional projected earnings growth, which stands well above peers. Investors seem energized by positive earnings revisions and strong cash flow figures.
See our latest analysis for Houlihan Lokey.
After a strong run, Houlihan Lokey’s share price has cooled recently, with a 30-day decline of 11.6% despite upbeat earnings revisions and robust cash flow news in the spotlight. Over the past five years, long-term shareholders have still seen a remarkable total return of nearly 187%, reflecting powerful growth momentum that has weathered short-term swings.
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Given this impressive growth trajectory and a recent pullback in share price, is the market offering a rare entry point into Houlihan Lokey, or are investors already pricing in every bit of that high-powered future growth?
With Houlihan Lokey trading at $175.40, the most widely followed narrative suggests a fair value well above the recent share price. This implies a notable upside driven by strong future expectations. Let’s take a closer look at a key narrative catalyst that underpins this view.
Ongoing global expansion, sector diversification, and talent recruitment position Houlihan Lokey for sustained revenue growth and increased market share. Strong pipelines from succession planning, resilient restructuring activity, and enhanced client engagement are stabilizing fee income and supporting earnings despite macroeconomic shifts.
Curious about the ambitious earnings roadmap baked into this fair value? Want to see which bold margin and revenue forecasts make analysts double down on their outlook? The real story behind this valuation could surprise you. Don’t miss the pivotal assumptions powering this price.
Result: Fair Value of $210.86 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, Houlihan Lokey’s reliance on US market trends and persistent high costs could threaten its growth if global M&A activity or expense control falters.
Find out about the key risks to this Houlihan Lokey narrative.
Now let’s use a different lens and compare Houlihan Lokey’s share price to its earnings. The company currently trades at a ratio of 28.8 times earnings, which is significantly higher than both the industry average of 23.6 times and the peer average of just 18.1 times. Even when benchmarked against our fair ratio estimate of 16.3, HLI appears expensive.
