HLI Stock Study (11-7-26)

Posted by Mark on November 14, 2026 at 07:15 | Last modified: November 7, 2026 10:53

I recently did a stock study on Houlihan Lokey Inc. (HLI, $145.86).

M* writes:

     > Houlihan Lokey Inc is an investment bank with expertise in mergers
     > and acquisitions, capital markets, financial restructuring, valuation,
     > and strategic consulting. The firm serves corporations, institutions,
     > and governments world-wide with offices in the United States, Europe,
     > and the Asia-Pacific region. The company operates in three segments.
     > In the Corporate Finance business segment, it provides M&A and
     > capital markets advisory services. Through the Financial Restructuring
     > business segment, the company advises on some of the complex
     > restructurings around the world. The Financial and Valuation Advisory
     > Services business segment provides valuation and financial opinion,
     > and financial and strategic consulting practices in the United States.

Over the past decade, this medium-size company has grown sales and EPS at annualized rates of 13.5% and 14.0% [FY ends Mar 31; calendar years from BI website and Value Line (VL) incremented by one to match]. Lines are mostly up, straight, and parallel except for EPS dip in ’19 and sales+EPS decline in ’23—the latter of which leaves ’22 as the EPS highwater mark (see below). Five- (10-) year EPS R^2 is 0.06 (0.75) and VL gives an Earnings Predictability score of 60. Shares outstanding increase 1.5% (0.2% per year).

Over the past decade, PTPM leads peer averages but trails the industry while ranging from 17.9% in ’23 to 26.8% in ’21 with a last-5-year mean of 21.7%. ROE is roughly even with peer averages and leads the industry while increasing from 14.9% to 18.8% (’26) with a last-5-year mean of 19.9% (shareholder equity consistently positive and increasing 13.9%/year). Debt-to-capital is less than peer and industry averages with a last-5-year mean of 16.7% (operating leases).

Quick ratio is 1.59 and interest coverage N/A per M* who assigns “Narrow” Economic Moat and a B grade for Financial Health (per BI website). VL gives an A rating for Financial Strength and reports no long-term debt.

RightStock—a new tool on the BI website that I am tracking for informational purposes—gives a Fit score of 62 (“limited,” citing poor EPS quality with 5-year growth of 3.8% and poor ROE with a 5-year average 19.9%—not low but a relative laggard) and an Opportunity score of 11 (“poor,” citing 6.1 PEG, zero U/D, and ~2% PAR ). Basically, why study this stock?

As described above, visual inspection has a characteristic hump that I’ve seen with several companies. Google AI explains the primier global restructoring advisor was very busy when COVID-19 lockdowns hit as companies rushed to restructure debt and file for bankruptcy. Unprecedented stimulus and minuscule interest rates then launched an historic rebound where M&A activity exploded and HLI’s Corporate Finance segment saw a massive surge in closed transactions and higher fees. Although EPS has yet to eclipse 2022, excluding ’21 and ’22 leaves railroad tracks that trigger no earnings audit flags.

Were RightStock to factor in excluded data (i.e. Audit tab), I’m guessing that 3.8% would be higher along with the Fit score.

With regard to sales growth:

• YF gives YOY ACE 3.8% and 15.0% for ’27 and ’28, respectively (based on 10 analysts).
• Zacks gives YOY ACE 1.9% and 16.0% for ’27 and ’28, respectively (4 analysts).
• VL projects 8.9% per year from ’26-’31.
• CFRA projects 0.3% contraction YOY and 8.8% growth per year for ’27 and ’26-’28, respectively.
• M* gives 2-year annualized ACE of 9.8% growth.

My 7.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 6.3% and 7.7% per year for ’26-’28 and ’26-’29 (based on 11 analysts).
• Nasdaq.com gives ACE 21.3% YOY and 19.3% per year for ’28 and ’27-’29 (5 / 5 / 2 analysts for ’27 / ’28 / ’29).
• Seeking Alpha projects 4-year annualized growth of 6.9%.
• Finviz gives 5-year annualized ACE of 8.4% (2).
• LSEG has LTG at 11.7%.
• CFRA projects 12.9% YOY and 17.5% per year for ’27 and ’26-’28, respectively.
• YF gives YOY ACE 3.7% contraction and 19.5% growth for ’27 and ’28, respectively (11).
• Zacks gives YOY ACE 4.2% contraction for ’27 and 21.2% growth for ’28 along with 5-year growth of 11.7% (5).
• VL projects 9.7% annualized growth from ’26-’31.

My 6.0% forecast is below the long-term-estimate range (mean of five: 9.7%). Initial value is 2027 Q2 EPS $5.96/share (TTM) rather than ’26 EPS of $6.22.

My Forecast High P/E is 20.0. Over the past 10 years, high P/E increases from 21.4 to 34.0 (’26) with last-5-year mean of 29.2 and a last-5-year-mean average P/E of 23.9. I am near bottom of the range (only 16.1 in ’21 and 19.1 in ’22 are less).

My Forecast Low P/E is 12.0. Over the past 10 years, low P/E increases from 12.9 to 21.6 (’26) with a last-5-year mean of 18.6. I am forecasting near bottom of the range (only 10.1 in ’22 and 11.6 in ’21 are less).

My Low Stock Price Forecast (LSPF) of $71.50 is default based on initial value from above: 50.1% less than the previous close and 36.6% less than the 52-week low.

Over the past 10 years, payout ratio ranges from 26.8% in ’22 to 56.4% in ’23 with a last-5-year mean of 42.9%. I am forecasting below the range at 26.0%.

These inputs land HLI in the HOLD zone with a U/D ratio of 0.2. Total Annualized Return (TAR) is 3.1%.

PAR (using Forecast Average—not High—P/E) of -1.0% is unthinkable as an investment candidate. Even if a solid margin of safety (MOS) backs this study, TAR remains less than the risk-free rate (T-bills).

To assess MOS, I would usually start by comparing my inputs with those of Member Sentiment but only four other studies are available over the past 90 days.

VL projects a future average P/E of 18.0 versus my 16.0.

My high EPS is $7.98/share versus $12.00 for VL. Normalized for my lower initial value, the latter is $9.46.

My LSPF may seem unreasonably low but I won’t raise it just because the stock may have gotten ahead of itself.

MOS is robust in the study because my inputs are below/near most historical/analyst estimates and ranges.

With regard to valuation, PEG is 1.7 and 3.8 per Zacks and my projected P/E: overvalued (7.7 per M* seems extremely high and may involve negative short-term projections?). Relative Value [(current P/E) / 5-year-mean average P/E] is slightly elevated at 1.03. “Quick and dirty” cash flow has stock undervalued by 29% (even with dividend payments excluded). M* reports stock at a 9% discount (seems inconsistent with PEG).

Quite a good outing for RightStock on this one! While opportunity currently lacks, I now know when it may appear.

Per my SSG, HLI is a U/D BUY under $93 share. Given forecast high price ~$160, [159.6 / ((13.57 / 100 ) +1 ) ^ 5] ~$84 meets the BetterInvesting® TAR criterion.

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