Houlihan Lokey (HLI) Tests Its Growth Story After Buyback And Dividend Update

Houlihan Lokey (HLI) recently completed a multi year share repurchase program alongside its latest quarterly results and dividend declaration. Together, these moves give you a clearer picture of how the company is currently allocating capital.

See our latest analysis for Houlihan Lokey.

Houlihan Lokey’s recent buyback, softer first quarter earnings and affirmed dividend come against a weaker share price backdrop, with the stock down 17.48% on a 90 day share price return and 30.03% year to date. However, the 5 year total shareholder return of 51.39% points to much stronger longer term momentum.

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Bulls point to Houlihan Lokey’s completed buyback, long term returns and dividend as signs of confidence. Bears highlight softer earnings and the recent share price fall. Which side looks closer to fair value once you run the numbers?

Most Popular Narrative: 20.1% Undervalued

Houlihan Lokey's most followed valuation narrative points to a fair value of $154.50 compared with the last close at $123.39, which implies a meaningful valuation gap that hinges on specific growth and profitability assumptions.

Expansion of business lines (notably Capital Solutions and secondaries) and continued emphasis on senior talent recruitment are enhancing sector and product breadth, positioning the firm to capture incremental market share and drive incremental revenue growth. Investment in strategic client engagement (such as large scale flagship conferences) and enhanced digital capabilities are expected to reinforce client relationships and operational efficiency, supporting both revenue growth through deeper client penetration and stabilization or improvement of net margins.

Read the complete narrative.

Want to see what kind of revenue run rate and margin profile this narrative is banking on? The fair value hinges on faster top line growth, richer profitability and a future earnings multiple that needs to line up with those expectations. The full narrative sets out how those moving parts fit together.

Result: Fair Value of $154.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, you still need to consider that Houlihan Lokey’s high cost base and reliance on U.S. driven M&A could pressure margins and deal flow if activity slows.

Find out about the key risks to this Houlihan Lokey narrative.

Next Steps

Overall, does Houlihan Lokey’s story feel more encouraging or cautious to you right now? Act while the facts are fresh in your mind and weigh up the 4 key rewards.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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