Houlihan Lokey
HLI
$132.61
+1.58%
Houlihan Lokey, Inc. is a global investment bank specializing in mergers and acquisitions, capital markets advisory, financial restructuring, valuation, and strategic consulting, serving corporations, institutions, and governments across the United States, Europe, and Asia-Pacific through three reporting segments: Corporate Finance, Financial Restructuring, and Financial and Valuation Advisory. The firm is best known as the preeminent restructuring advisor in the world, a countercyclical franchise that gives it a differentiated competitive identity versus bulge-bracket peers whose fortunes are more tightly tied to buoyant M&A markets. The current investor narrative is dominated by a sharp deceleration in deal activity: the most recent quarter (period ending 2026-03-31) showed revenue of $635.6 million, down 4.6% year over year, and the stock has fallen roughly 37% over the past year as the market digests a weaker Corporate Finance pipeline and a restructuring cycle that has not yet scaled enough to offset the M&A slowdown. With eight analysts still carrying a consensus "buy" rating and an average target of $153.50, the debate centers on whether the current trough in advisory activity represents a cyclical buying opportunity or the start of a more structural earnings reset.β¦
HLI
Houlihan Lokey
$132.61
Investment Opinion: Should I buy HLI Today?
The synthesized recommendation is Hold. The core thesis is that Houlihan Lokey is a high-quality franchise with a fortress balance sheet and countercyclical restructuring exposure, but the current earnings downturn and uncertain timing of an M&A recovery make the risk/reward balanced at $130.55. The analyst consensus is 'buy' with an average target of $153.50, implying 17.6% upside, but the dispersion of targets ($145-$177) and the lack of recent upgrades suggest analysts are in a holding pattern awaiting evidence of a revenue inflection.
Supporting evidence for a Hold includes: (1) the forward PE of 14.85x is undemanding if estimates hold, but the trailing PE of 22.44x and PEG of 4.26 indicate the stock is not statistically cheap; (2) revenue declined 4.62% year over year, and net income fell 18%, showing fundamental deterioration; (3) free cash flow remains robust at $681.8 million TTM with a 97.9% conversion rate, and the dividend yield of 1.82% is comfortably covered with a 40.9% payout ratio; (4) the balance sheet is a strength with debt-to-equity of 0.21 and $1.19 billion in cash. The stock's 37% one-year decline has de-rated it from peak multiples, but it still trades at a premium to book and sales.
The biggest risks that could invalidate the Hold rating are: (1) a further decline in M&A activity leading to earnings misses and estimate cuts; (2) multiple compression if the market re-rates advisory firms lower; and (3) competitive pressures eroding market share. The rating would upgrade to Buy if revenue growth turns positive and the forward PE remains below 15x, or if the stock breaks above $145 with improving deal activity. It would downgrade to Sell if revenue declines accelerate, the forward EPS estimate is cut below $8.50, or the stock breaks below the 52-week low of $112.83. On balance, the stock appears fairly valued relative to its history and peers, with the market already pricing in a recovery that has yet to be confirmed.
Sign up to view all
HLI 12-Month Price Forecast
Houlihan Lokey is a high-quality franchise navigating a cyclical downturn in M&A advisory, with a countercyclical restructuring business that has not yet scaled enough to offset the weakness. The stock has de-rated significantly, down 37% over one year, and now trades at 22.4x trailing earnings and 14.85x forward earnings, a valuation that embeds a recovery. The balance sheet is pristine, free cash flow is robust, and the dividend is well covered, providing downside support. However, the lack of a clear catalyst for revenue inflection and the risk of estimate cuts keep the near-term outlook neutral. I would upgrade to bullish if revenue growth turns positive and the stock breaks above $145, or downgrade to bearish if the forward EPS estimate is cut below $8.50 or the stock breaks below $112.83.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Houlihan Lokey's 12-month outlook, with a consensus price target around $153.50 and implied upside of +15.8% versus the current price.
Average Target
$153.50
0 analysts
Implied Upside
+15.8%
vs. current price
Analyst Count
β
covering this stock
Price Range
$145 - $177
Analyst target range
Eight analysts cover Houlihan Lokey, and the consensus recommendation is "buy" with a recommendation mean of 2.27 (where lower is more bullish). The average price target is $153.50, which implies roughly 17.6% upside from the current price of $130.55. The consensus leans moderately bullish, but the dispersion of opinion is meaningful: the target range spans from a low of $145.00 to a high of $177.00, a spread of $32.00, or about 22% of the current price, indicating that even the most bearish analyst sees double-digit upside β an unusual configuration that suggests the sell-side views the recent selloff as overdone.
The high target of $177.00 implies roughly 35.6% upside and would require a meaningful re-rating, likely predicated on an M&A recovery, accelerating restructuring mandates, and multiple expansion back toward the stock's historical average. The low target of $145.00 still implies 11.1% upside and appears to price in a slower recovery with continued margin pressure but no outright deterioration. Institutional ratings show a stable, if unenthusiastic, posture: Keefe, Bruyette & Woods and Morgan Stanley have maintained Outperform/Overweight ratings through mid-2026, Goldman Sachs reiterated Buy in April 2026, while UBS has stayed Neutral since March 2026 β no recent upgrades or downgrades, suggesting analysts are in a holding pattern awaiting evidence of a revenue inflection. The tight clustering of targets above the current price, combined with the stock's 37% one-year decline, sets up an asymmetric setup: if the company merely meets the low end of expectations, the stock has limited downside to the consensus floor, but a miss on the $9.69 EPS estimate would likely force a broad reset of targets and validate the bear case.
Drowning in data?
Find the real signal!
Bulls vs Bears: HLI Investment Factors
The bear case currently has stronger evidence, driven by concrete fundamental deterioration: a 4.62% revenue decline, an 18% drop in net income, and a 37% one-year stock decline that has crushed relative strength by 52 percentage points versus the S&P 500. The bull case rests on the fortress balance sheet, robust free cash flow, and analyst targets that all sit above the current price, but these are largely defensive or forward-looking supports rather than evidence of an imminent inflection. The single most important tension is whether the current advisory trough is cyclical or structural: if M&A activity rebounds and restructuring mandates scale, the forward PE of 14.85x will prove conservative and the stock can re-rate toward the $153.50 average target; if deal activity stays depressed and estimates are cut, the stock risks breaking its 52-week low of $112.83. Until revenue growth inflects, the weight of evidence favors caution despite the seemingly attractive forward multiple.
Bullish
- Fortress balance sheet with strong FCF: Debt-to-equity is just 0.21 and the current ratio is 1.53, with $1.19 billion in cash against negligible debt. The company generated $681.8 million in trailing free cash flow and $286.8 million in the most recent quarter alone, a 97.9% conversion rate from operating cash flow, underscoring the asset-light, cash-generative advisory model.
- Analyst targets imply double-digit upside: All eight analysts have targets above the current $130.55 price, with a low of $145 (11.1% upside) and an average of $153.50 (17.6% upside). The consensus recommendation is 'buy' with a mean of 2.27, and no recent downgrades, suggesting the sell-side views the 37% one-year decline as overdone.
- Countercyclical restructuring franchise: Financial Restructuring contributed $110.4 million in the latest quarter, providing a hedge against the M&A downturn that has pressured Corporate Finance revenue. As economic uncertainty persists, restructuring mandates could scale and partially offset the cyclical weakness in deal activity.
- Undemanding cash flow valuation: The price-to-free-cash-flow ratio is 13.57x and EV/EBITDA is 14.65x, both reasonable for a high-quality, asset-light financial intermediary with an 18.2% ROE. The forward PE of 14.85x is 33.8% below the trailing PE of 22.44x, implying the market expects a significant earnings recovery.
Bearish
- Revenue and earnings deceleration: Latest quarter revenue fell 4.62% year over year to $635.6 million, and net income dropped 18% to $99.8 million from $121.9 million a year earlier. EBITDA margin compressed to 22.43% from 26.31%, showing negative operating leverage as advisory activity slows.
- Forward estimates may be too optimistic: Consensus expects $9.69 in EPS and $3.36 billion in revenue, but the trailing PE of 22.44x versus forward PE of 14.85x implies a sharp recovery that has not yet appeared. If estimates are revised down, the forward multiple would rise mechanically, undermining the 'cheap' narrative.
- Severe technical downtrend: The stock is down 37.37% over one year and 25.97% year-to-date, massively underperforming the S&P 500's +15.01% and +11.70% returns. It sits at just 17.9% of its 52-week range with a maximum drawdown of -41.02%, and would need a 62% rally to reclaim its 52-week high of $211.78.
- Premium valuation on book and sales: Price-to-book of 4.08x and price-to-sales of 3.65x are elevated for an advisory firm, while the PEG ratio of 4.26 signals the stock is not inexpensive relative to its growth rate. The market is still paying a premium for a franchise whose earnings are contracting.
HLI Technical Analysis
Houlihan Lokey is in a clear, sustained downtrend: the stock is down 37.37% over the past year and 25.97% year-to-date, a stark underperformance versus the S&P 500's +15.01% 1-year and +11.70% YTD returns. At the current price of $130.55, the stock sits at just 17.9% of its 52-week range (low of $112.83, high of $211.78), meaning it is trading in the bottom fifth of its annual band β a positioning that typically signals either deep value or a falling knife, and given the negative relative strength of -52.38% over one year, the weight of evidence favors the latter until a base forms. The maximum drawdown of -41.02% confirms the severity of the de-rating, and the stock would need to rally roughly 62% just to reclaim its 52-week high.
Short-term momentum is showing tentative signs of stabilization but remains fragile. The 1-month change is +0.35%, a modest positive that contrasts with the 3-month change of -7.26% and the 6-month change of -6.42%, suggesting the pace of decline is decelerating rather than reversing. Notably, relative strength over the past month is +1.31% versus SPY, meaning HLI has marginally outperformed the market over the last 30 days even as it lags badly over longer windows β a classic early-stage mean-reversion signal that needs confirmation. The most recent price action is discouraging, however: the stock fell 1.59% on the latest session to $130.55 from a previous close of $132.66, and the short ratio of 3.21 indicates bears are not aggressively pressing the position, leaving room for a squeeze if sentiment improves.
Key technical levels are well defined. Support sits at the 52-week low of $112.83, roughly 13.6% below the current price; a breakdown below that level would likely trigger momentum-driven selling and open the door to new lows. Resistance is anchored at the 52-week high of $211.78, some 62% above the current price, with intermediate resistance likely forming around the $140-$145 zone where the stock repeatedly stalled in June and July. The beta of 0.967 indicates the stock moves roughly in line with the broader market, so the current weakness is company- and sector-specific rather than a function of elevated market sensitivity β meaning position sizing should be driven by fundamental conviction rather than volatility hedging, and a breakout above $145 would be the first meaningful signal that the downtrend is exhausting.
Beta
0.97
0.97x market volatility
Max Drawdown
-41.0%
Largest decline past year
52-Week Range
$113-$212
Price range past year
Annual Return
-36.5%
Cumulative gain past year
| Period | HLI Return | S&P 500 |
|---|---|---|
| 1m | +2.8% | +1.0% |
| 3m | -5.7% | +5.4% |
| 6m | -6.5% | +17.8% |
| 1y | -36.5% | +16.5% |
| ytd | -24.8% | +13.4% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
HLI Fundamental Analysis
Houlihan Lokey's revenue trajectory has turned negative, a notable shift for a franchise that had grown steadily for years. The most recent quarter (ending 2026-03-31) generated revenue of $635.6 million, a year-over-year decline of 4.62%, compared with $666.4 million in the prior-year quarter and $717.1 million in the December 2025 quarter. The sequential and year-over-year softness is concentrated in the Corporate Finance segment, which contributed $433.8 million versus $110.4 million from Financial Restructuring β the restructuring business, while countercyclical, is not yet large enough to offset the M&A slowdown. This growth deceleration is the central bear case: if advisory activity remains depressed, consensus estimates for $3.36 billion in revenue and $9.69 in EPS may prove optimistic.
Profitability remains solid in absolute terms but is compressing. The company reported net income of $99.8 million in the latest quarter, with a net margin of 16.26% and an operating margin of 23.63%; gross margin is reported at 98.37%, though this figure is distorted by the firm's cost-of-revenue classification and is not comparable to industrial peers. The more telling trend is the decline in net income from $121.9 million in the March 2025 quarter to $99.8 million in March 2026, a drop of roughly 18%, while the net income ratio fell from 18.29% to 15.71% over the same period. EBITDA also slipped to $142.6 million from $175.3 million a year earlier, and the EBITDA margin compressed to 22.43% from 26.31%, confirming that operating leverage is working in reverse as revenue declines.
The balance sheet is a genuine strength. Debt-to-equity stands at a conservative 0.21, the current ratio is a healthy 1.53, and the company holds $1.19 billion in cash against negligible debt repayment obligations. Free cash flow on a trailing-twelve-month basis is $681.8 million, and the most recent quarter alone generated $286.8 million in FCF on $293.0 million of operating cash flow, a 97.9% conversion rate that underscores the asset-light, cash-generative nature of the advisory model. Return on equity of 18.17% and return on assets of 11.17% remain respectable for the sector, and the dividend β yielding 1.82% with a payout ratio of 40.9% β is comfortably covered, leaving ample capacity for continued buybacks (nearly $50 million repurchased last quarter) and bolt-on acquisitions.
Quarterly Revenue
$635643000.0B
2026-03
Revenue YoY Growth
-4.6%
YoY Comparison
Gross Margin
98.7%
Latest Quarter
Free Cash Flow
$681819000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is HLI Overvalued?
Because Houlihan Lokey is profitable β trailing net income is positive and the trailing PE is 22.44x β the PE ratio is the appropriate primary valuation metric. The trailing PE of 22.44x compares with a forward PE of just 14.85x, a 33.8% compression that implies the market expects a significant earnings recovery; however, given the 4.62% year-over-year revenue decline and the 18% drop in quarterly net income, that forward estimate of $9.69 in EPS may be vulnerable to downward revision, which would mechanically raise the forward multiple and undermine the "cheap" narrative. The PEG ratio of 4.26 further suggests the stock is not inexpensive relative to its growth rate.
Relative to the broader financial services sector, HLI screens as a premium asset on some measures and a discount on others. The price-to-book ratio of 4.08x and price-to-sales ratio of 3.65x are elevated for an advisory firm, reflecting the market's historical willingness to pay up for Houlihan's restructuring franchise and consistent profitability. The EV/EBITDA of 14.65x is roughly in line with what investors typically pay for high-quality, asset-light financial intermediaries, while the price-to-free-cash-flow ratio of 13.57x is notably undemanding and highlights the disconnect between the stock's earnings multiple and its cash generation. On balance, the valuation embeds a recovery that has not yet materialized in the reported numbers.
Historically, HLI's PE has ranged from roughly 9.7x (December 2021) to 30.7x (September 2025), with the current 22.44x sitting near the middle of that band but well below the 30x-plus levels seen at the 2025 peak. The price-to-sales ratio tells a starker story: at 3.65x, it is far below the 14.99x-20.85x readings from the 2025-2026 period, though those figures appear inflated by a data classification quirk in the historical series. What is clear is that the stock has de-rated substantially from its highs, and at 22.4x trailing earnings with an 18.2% ROE and a fortress balance sheet, the valuation is no longer demanding β but it is also not a deep-value bargain until revenue growth inflects.
PE
22.4x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 16x~31x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
14.6x
Enterprise Value Multiple
Investment Risk Disclosure
Houlihan Lokey's financial risks are primarily earnings-related rather than balance-sheet-related. The company carries a conservative debt-to-equity of 0.21 and holds $1.19 billion in cash, so solvency is not a concern. However, revenue declined 4.62% year over year to $635.6 million in the latest quarter, and net income fell 18% to $99.8 million, with the net margin contracting to 15.71% from 18.29%. EBITDA margin compressed to 22.43% from 26.31%, demonstrating that operating leverage is working in reverse. The concentration in Corporate Finance, which generated $433.8 million versus $110.4 million from restructuring, means the company remains highly dependent on a cyclical M&A recovery that has yet to materialize. If advisory activity stays weak, the consensus EPS of $9.69 for the forward year could be revised down, pressuring the stock further.
Market and competitive risks are significant given the stock's premium valuation and sector dynamics. HLI trades at 4.08x book and 3.65x sales, elevated multiples for an advisory firm, and its PEG ratio of 4.26 suggests the market is paying up for growth that is currently negative. The beta of 0.967 indicates the stock moves roughly in line with the broader market, so the 37% one-year decline is company- and sector-specific rather than a function of market volatility. Competitive pressure from bulge-bracket banks and boutique rivals could limit pricing power and market share as deal activity recovers. Additionally, if the M&A cycle remains subdued due to elevated interest rates or economic uncertainty, the entire advisory sector could face multiple compression, and HLI's premium valuation would be vulnerable.
In a worst-case scenario, a continued decline in M&A activity combined with a failure of restructuring mandates to scale would lead to further earnings misses and analyst downgrades. The stock could retest its 52-week low of $112.83, which represents a 13.6% decline from the current price of $130.55. If the bear case intensifies and the stock breaks below that level, the next support might not emerge until the low $100s, implying a potential loss of 20-25% from current levels. The maximum drawdown over the past year was already -41.02%, so a further 20% decline would not be unprecedented. Investors should be prepared for the possibility that the forward EPS estimate of $9.69 is too high; a cut to $8.50 would raise the forward PE to over 15x, making the stock look less cheap and potentially triggering another leg down.
FAQ
The most severe risk is a prolonged M&A downturn that keeps revenue and earnings depressed, potentially leading to estimate cuts and a break below the 52-week low of $112.83. Financial risks include margin compression, with EBITDA margin falling to 22.43% from 26.31%, and the possibility that the forward EPS estimate of $9.69 is too high. Competitive risks stem from bulge-bracket banks and boutique rivals competing for advisory mandates, which could limit pricing power and market share. Macro risks include elevated interest rates or economic uncertainty that delays deal activity, and sector rotation away from financial services stocks. Company-specific risks include concentration in Corporate Finance, which generated $433.8 million versus $110.4 million from restructuring, making results highly sensitive to M&A cycles. Ranked by severity: earnings/estimate risk, macro/M&A cycle risk, competitive risk, and valuation compression risk.
The 12-month forecast is based on three scenarios: a bull case with 25% probability targeting $170-$177 (analyst high), a base case with 55% probability targeting $145-$155 (analyst average), and a bear case with 20% probability targeting $112-$125 (52-week low). The base case is most likely, assuming M&A activity stabilizes and restructuring revenue holds around $110-120 million per quarter, with forward EPS revised to $9.00-$9.50. The bull case requires a broad M&A recovery and multiple expansion, while the bear case assumes a prolonged deal drought and estimate cuts. The key assumption behind the base case is that the company meets or slightly misses current estimates, and the stock gravitates toward the analyst average target of $153.50. Investors should monitor quarterly revenue growth and restructuring revenue for signs of inflection.
HLI appears fairly valued to slightly undervalued on a forward basis but expensive on trailing metrics. The trailing PE of 22.44x is near the middle of its historical range (9.7x to 30.7x), while the forward PE of 14.85x represents a 33.8% compression that implies a significant earnings recovery. The price-to-book of 4.08x and price-to-sales of 3.65x are elevated for an advisory firm, and the PEG ratio of 4.26 suggests the stock is not cheap relative to its growth rate. However, the price-to-free-cash-flow of 13.57x is undemanding and highlights the disconnect between earnings and cash generation. The market is pricing in a recovery that has not yet appeared in reported results; if estimates are cut, the stock could look overvalued. Relative to peers, HLI typically commands a premium due to its restructuring franchise, but that premium is currently justified only if earnings inflect.
From a risk/reward perspective, HLI is a Hold rather than a strong Buy at $130.55. The analyst average target of $153.50 implies 17.6% upside, and the low target of $145 still offers 11.1% upside, suggesting the sell-side sees limited downside. However, the stock is down 37% over one year, revenue declined 4.62% in the latest quarter, and net income fell 18%, so the fundamental momentum is negative. The forward PE of 14.85x looks attractive, but it relies on an EPS estimate of $9.69 that may be too optimistic. For long-term investors with a 2-3 year horizon and tolerance for volatility, the risk/reward is moderately favorable given the fortress balance sheet and countercyclical restructuring business. For short-term traders, the downtrend and lack of catalyst make it a poor entry until the stock establishes a base above $145.
HLI is better suited for long-term investment than short-term trading. The stock is in a clear downtrend, down 37% over one year, with a beta of 0.967 and a maximum drawdown of -41.02%, indicating significant volatility. The dividend yield of 1.82% with a 40.9% payout ratio provides some income, but the primary return driver is capital appreciation from an M&A recovery, which may take 12-24 months to materialize. Earnings visibility is currently low due to the cyclical downturn, making short-term trading risky. A suggested minimum holding period is 2-3 years to allow the advisory cycle to recover and the restructuring franchise to scale. Short-term traders should wait for a technical breakout above $145 before considering entry. Long-term investors can accumulate on weakness near the 52-week low of $112.83, but should size positions modestly given the earnings uncertainty.
