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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on HLI

Negative drivers behind Houlihan Lokey's recent performance include a decrease in stake by several institutional investors, such as CW Advisors LLC and Baird Financial Group Inc., which may indicate a loss of confidence in the company's prospects. Additionally, the firm's Q3 earnings report showed a slight decline in year-over-year growth, with revenues increasing by 13.1% compared to 15.4% in the previous quarter. Furthermore, the company's net income margin contracted to 16.3% from 15.1% in the prior-year period, indicating a decrease in profitability.

1.c. Company Highlights

2. Houlihan Lokey's Strong Q3 FY2026 Earnings Beat Expectations

Houlihan Lokey reported a robust third quarter fiscal year 2026, with revenues reaching $717 million, up 13% year-over-year, and adjusted earnings per share (EPS) of $1.94, an 18% increase from the same period last year, surpassing analyst estimates of $1.85. The company's financial performance was driven by strong growth in its Corporate Finance and Financial Restructuring businesses, which saw revenues increase by 12% and 19% year-over-year, respectively. The adjusted non-compensation expense ratio for the quarter was 13.1%, indicating effective cost management.

Publication Date: Feb -08

📋 Highlights
  • Revenue & Earnings Growth:: Q3 2026 revenues reached $717M (+13% YoY), with adjusted EPS of $1.94 (+18% YoY).
  • Corporate Finance Revenue:: Generated $474M (+12% YoY), driving 66% of total revenue growth.
  • Financial Restructuring Surge:: Revenue hit $156M (+19% YoY), outpacing all other business lines.
  • Expense Efficiency:: Adjusted non-compensation expense ratio improved to 13.1%, with $441M in compensation expenses.
  • Global Expansion Outlook:: European business grows "incredibly well," with France acquisition boosting regional revenue and market share.

Segment Performance

The Corporate Finance business produced $474 million of revenue, driven by increasing activity levels across various sectors, with the US continuing to be the largest region, while the European business is growing strongly. Financial Restructuring revenues were $156 million, a 19% increase year-over-year, despite expectations of declining activity levels due to improving market conditions. Financial and Valuation Advisory revenues were $87 million, up 6% year-over-year.

Outlook and Guidance

Management expects the Corporate Finance business to continue its strong growth trajectory, with good visibility into fiscal 2027. However, they anticipate declining activity levels in restructuring due to improving market conditions. The company is well-positioned to capitalize on new opportunities arising from geopolitical events and has a strong pipeline of acquisition opportunities. As Scott Adelson stated, "We have good visibility that this trend will continue into fiscal 2027."

Valuation and Return Metrics

With a P/E Ratio of 25.74 and an EV/EBITDA multiple of 18.05, the stock appears to be fairly valued. However, the company's strong return metrics, including an ROE of 20.14% and an ROIC of 14.2%, suggest a robust business model. Analysts estimate next year's revenue growth at 13.1%, which, combined with the current valuation multiples, indicates a reasonable growth outlook.

Share Repurchase and Acquisition Strategy

The company has started repurchasing shares and will continue to do so if the economy performs well and they have a strong pipeline of acquisition opportunities. Management's preference is to allocate excess cash to strategic acquisitions, followed by dividends and share repurchases, indicating a disciplined approach to capital allocation.

3. NewsRoom

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HOULIHAN LOKEY INVESTIGATION ALERT: Kaskela Law Firm is Investigating Houlihan Lokey, Inc. (NYSE: HLI) and Encourages HLI Stockholders to Contact the Firm

Feb -13

Source: globenewswire.com

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Houlihan Lokey: Other Mid-Market Are Players Getting More Investment Banking Growth

Feb -04

Source: seekingalpha.com

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Houlihan Lokey Expands Specialty Distribution Capabilities With Senior European Hires

Feb -03

Source: businesswire.com

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Houlihan Lokey Q3 Earnings Call Highlights

Jan -30

Source: defenseworld.net

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Harbor Small Cap Growth Fund Q4 2025 Portfolio Performance

Jan -30

Source: seekingalpha.com

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Houlihan Lokey, Inc. (HLI) Q3 2026 Earnings Call Transcript

Jan -29

Source: seekingalpha.com

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Houlihan Lokey (HLI) Reports Q3 Earnings: What Key Metrics Have to Say

Jan -29

Source: zacks.com

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Houlihan Lokey (HLI) Q3 Earnings and Revenues Top Estimates

Jan -29

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.28%)

6. Segments

Corporate Finance

Expected Growth: 10%

Houlihan Lokey's Corporate Finance segment growth is driven by increasing M&A activity, strategic advisory services, and debt and equity capital markets transactions. Strong demand for restructuring and recapitalization services, as well as expansion into new markets and industries, also contribute to the 10% growth rate.

Financial Restructuring

Expected Growth: 12%

Houlihan Lokey's 12% growth in Financial Restructuring is driven by increasing demand for debt advisory services, rising distressed debt opportunities, and expansion into new markets. The firm's expertise in complex restructuring cases, strong relationships with stakeholders, and strategic acquisitions also contribute to its growth.

Financial and Valuation Advisory

Expected Growth: 9%

Houlihan Lokey's 9% growth in Financial and Valuation Advisory is driven by increasing demand for M&A advisory services, expansion into new markets, and growth in restructuring and debt advisory practices. Additionally, the firm's investments in technology and data analytics have enhanced its service offerings, attracting new clients and increasing wallet share.

7. Detailed Products

Mergers and Acquisitions

Houlihan Lokey's Mergers and Acquisitions team advises clients on buying and selling companies, including negotiating deal terms, conducting due diligence, and structuring transactions.

Capital Markets

Houlihan Lokey's Capital Markets team helps clients raise capital through debt and equity offerings, including IPOs, follow-on offerings, and debt placements.

Restructuring and Reorganization

Houlihan Lokey's Restructuring and Reorganization team advises clients on debt restructuring, bankruptcy, and turnaround situations.

Financial Restructuring

Houlihan Lokey's Financial Restructuring team advises clients on debt restructuring, debt-for-equity swaps, and other financial restructuring transactions.

Valuation Advisory

Houlihan Lokey's Valuation Advisory team provides independent valuation opinions for financial reporting, tax, and transaction purposes.

Dispute Resolution

Houlihan Lokey's Dispute Resolution team provides expert testimony and advisory services in litigation and arbitration matters.

8. Houlihan Lokey, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Houlihan Lokey, Inc. operates in a niche market, providing specialized financial services, which reduces the threat of substitutes. However, the company still faces competition from other financial institutions and boutique firms.

Bargaining Power Of Customers

Houlihan Lokey, Inc.'s clients are primarily large corporations and financial institutions, which have limited bargaining power due to the specialized nature of the company's services.

Bargaining Power Of Suppliers

Houlihan Lokey, Inc. has a diverse range of suppliers, including technology providers, consultants, and other service providers, which reduces the bargaining power of individual suppliers.

Threat Of New Entrants

The financial services industry has high barriers to entry, including regulatory requirements, capital requirements, and the need for specialized expertise, which reduces the threat of new entrants.

Intensity Of Rivalry

Houlihan Lokey, Inc. operates in a highly competitive industry, with many established players, which increases the intensity of rivalry among firms.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 39.01%
Debt Cost 3.95%
Equity Weight 60.99%
Equity Cost 7.36%
WACC 6.03%
Leverage 63.95%

11. Quality Control: Houlihan Lokey, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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PJT Partners

A-Score: 6.0/10

Value: 4.3

Growth: 8.1

Quality: 6.9

Yield: 3.0

Momentum: 6.0

Volatility: 7.7

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Houlihan Lokey

A-Score: 5.6/10

Value: 2.6

Growth: 6.8

Quality: 7.8

Yield: 3.0

Momentum: 5.0

Volatility: 8.3

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A-Score: 5.5/10

Value: 4.1

Growth: 5.4

Quality: 6.6

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Evercore

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Value: 3.0

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Quality: 8.0

Yield: 3.0

Momentum: 6.0

Volatility: 6.0

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LPL Financial Holdings

A-Score: 5.3/10

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Growth: 6.8

Quality: 6.5

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StoneX

A-Score: 5.1/10

Value: 7.3

Growth: 4.2

Quality: 4.6

Yield: 0.0

Momentum: 9.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

167.82$

Current Price

167.82$

Potential

-0.00%

Expected Cash-Flows