[RESEARCH BLOG] · 2026-07-16
Houlihan Lokey Inc. (HLI) – BUY Signal Amid Recovery‑Phase Upswing
By Pierre Brunelle · Founder & Research Lead
Lede: Houlihan Lokey closed Thursday, 2026‑07‑16 at $143.3, up 0.28 % (as of 2026‑07‑16). The LOPJLB model now flags a BUY directional signal with a top‑score of 5 in a RECOVERY market regime.
Recent Catalysts
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On July 9, the firm announced the addition of a senior executive to its Equity Capital Solutions group, a hire aimed at expanding deal‑originating capabilities in high‑growth sectors. The move was detailed in the release Houlihan Lokey Bolsters Equity Capital Solutions Capabilities With Senior Hire.
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A day earlier, July 8, Houlihan Lokey disclosed the scheduled release date for its fiscal 2027 first‑quarter results, signaling confidence in its upcoming earnings narrative. The announcement appears in Houlihan Lokey Announces Release Date for First Quarter Results for Fiscal Year 2027.
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Earlier in the month, July 1, the firm disclosed a strategic bet on the energy‑advisory space by acquiring Intrepid Financial Partners. The transaction was covered by Houlihan Lokey Bets on Energy Advisory Growth With Intrepid Buyout.
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The acquisition was formally announced on June 30 through a Business Wire release, confirming that Intrepid will operate as a wholly‑owned subsidiary within Houlihan Lokey’s Corporate Finance division. See Houlihan Lokey to Acquire Intrepid Financial Partners (also reported by Houlihan Lokey to Acquire Intrepid Financial Partners – GuruFocus).
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Finally, on June 24, Houlihan Lokey partnered with Morningstar Indexes to launch a daily‑valued index suite for the collateralized loan obligation (CLO) market. The collaboration is described in Morningstar Indexes & Houlihan Lokey to Launch Daily Valued Index Suite for the Collateralized Loan Obligation (CLO) Market.
Fundamentals and Valuation
Houlihan Lokey trades at a price‑to‑earnings (P/E) ratio of 22.43 on a trailing‑twelve‑month (TTM) basis, while the forward‑looking P/E is 18.39, reflecting market expectations of modest earnings acceleration. The firm’s enterprise value‑to‑EBITDA multiple stands at 14.09, and its EV‑to‑EBIT ratio is 16.35, both in line with peers in the boutique investment‑banking niche.
Profitability metrics remain robust. Gross margins are 51.87 %, operating margins 21.49 %, and net margins 16.26 %, indicating a strong conversion of revenue into earnings after accounting for operating expenses and taxes. Return on invested capital (ROIC) is an impressive 25.79 %, while return on equity (ROE) and return on assets (ROA) are 18.85 % and 9.88 %, respectively, underscoring efficient capital deployment.
Balance‑sheet strength is evident in the low debt‑to‑equity (D/E) ratio of 0.21, and the company’s interest coverage ratio of 999.0 suggests ample ability to meet debt service obligations. The firm distributes a dividend yield of 1.74 %, complemented by a free‑cash‑flow (FCF) yield of 6.89 %, and a modest buyback yield of 1.39 %, reflecting a balanced approach to returning capital to shareholders.
Revenue growth has accelerated, with year‑over‑year (YoY) revenue expanding 9.55 % in the most recent twelve‑month period. Earnings per share (EPS) grew 6.50 % YoY, while free cash flow rose 6.81 % (from $681.8 M in FY 2026 Q4 to $727.9 M in FY 2025 Q4). The firm’s PEG ratio of 15.57 signals that the market may be pricing in higher growth expectations relative to earnings multiples.
A historical view illustrates a trajectory of expanding scale and improving profitability. Revenue climbed from $1.53 B in FY 2021 to $2.62 B in FY 2026, a compound annual growth rate (CAGR) of roughly 13 %. EPS followed a similar pattern, rising from $4.75 in FY 2021 to $6.40 in FY 2026, while free cash flow surged from $565.7 M to $681.8 M over the same span. Margins have remained stable, with gross margins hovering around 38–51 % and net margins stabilizing near 16 % since FY 2023.
The valuation landscape is further illuminated by the price‑to‑book (P/B) ratio of 4.06 and price‑to‑free‑cash‑flow (P/FCF) of 14.51, both suggesting a premium relative to book value but a reasonable multiple on cash generation. The firm’s discounted‑cash‑flow (DCF) valuation is 136.7 % of the current market price, indicating that analysts see upside potential embedded in the forward outlook.
Analyst consensus remains bullish, with an average target price of $183.2, representing a 28 % upside from the current level. The consensus recommendation is a Buy, aligning with the LOPJLB directional signal.
| Metric | Value |
|---|---|
| P/E (TTM) | 22.43 |
| Forward P/E | 18.39 |
| EV/EBITDA | 14.09 |
| Gross Margin | 51.87 % |
| Net Margin | 16.26 % |
| ROIC | 25.79 % |
| Dividend Yield | 1.74 % |
| FCF Yield | 6.89 % |
The firm’s Value score of 57.00, Growth score of 70.00, GARP score of 28.20, and Quality score of 59.82 combine to produce a Balanced archetype, reflecting a blend of attractive valuation, solid growth prospects, and high‑quality earnings.
ETF Ownership
Houlihan Lokey’s stock is held across a diversified set of exchange‑traded funds, with 15 ETFs reporting exposure. The largest holders are:
| ETF | Weight |
|---|---|
| MDCP | 4.21 % |
| KMID | 3.12 % |
| ALIL | 2.53 % |
| AMID | 2.34 % |
| BCFN | 2.12 % |
| KCE | 1.63 % |
| EPSB | 1.40 % |
| SMCO | 1.39 % |
| OSCV | 1.28 % |
| OUSM | 1.23 % |
| RNMC | 1.20 % |
| SCAP | 1.19 % |
Concentrated ETF ownership can amplify price movements when fund managers rebalance or adjust sector allocations, especially in a recovery‑phase market where capital inflows tend to favor high‑quality financial‑services stocks. Monitoring the activity of these core holders may provide additional context for short‑term liquidity dynamics.
LOPJLB Signal Read
The LOPJLB engine currently assigns a BUY directional signal to HLI, reflecting a Score of 5 in a RECOVERY market regime that has persisted for the past 21 days. The composite PERF score of –12.00 and FUND quality score of 59.82 suggest that while recent price momentum is modest, the underlying fundamentals remain strong. The stock’s archetype is Balanced, indicating a mix of value, growth, and quality attributes.
Investors can explore the interactive chart above on the LOPJLB blog page for a visual overlay of the signal, EMA crossover, and other technical cues. For a deeper dive into the methodology that drives these signals, see the LOPJLB methodology page.
Explore further: detailed data, charting tools, and the full LOPJLB scorecard are available on the dedicated stock page for Houlihan Lokey (HLI). To screen for similar opportunities across the market, visit the LOPJLB stock screener.
The information provided herein is for research purposes only and does not constitute investment advice. All investors should conduct their own due diligence and consider their individual risk tolerance before making any investment decisions.
This post is independent quantitative research, not investment advice. LOPJLB signals are model outputs derived from price, volume, and fundamentals. Past backtests do not guarantee future results. Position sizing, execution, and risk management remain the reader's responsibility.