Advertisement
U.S. markets close in 5 hours 29 minutes
  • S&P 500

    5,251.55
    +3.06 (+0.06%)
     
  • Dow 30

    39,740.02
    -20.06 (-0.05%)
     
  • Nasdaq

    16,393.67
    -5.85 (-0.04%)
     
  • Russell 2000

    2,121.88
    +7.54 (+0.36%)
     
  • Crude Oil

    82.31
    +0.96 (+1.18%)
     
  • Gold

    2,225.90
    +13.20 (+0.60%)
     
  • Silver

    24.73
    -0.03 (-0.11%)
     
  • EUR/USD

    1.0808
    -0.0021 (-0.19%)
     
  • 10-Yr Bond

    4.1980
    +0.0020 (+0.05%)
     
  • GBP/USD

    1.2639
    +0.0001 (+0.01%)
     
  • USD/JPY

    151.2650
    +0.0190 (+0.01%)
     
  • Bitcoin USD

    71,050.85
    +1,406.62 (+2.02%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,963.06
    +31.08 (+0.39%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Houlihan Lokey (HLI) Hits 52-Week High, Can the Run Continue?

Have you been paying attention to shares of Houlihan Lokey (HLI)? Shares have been on the move with the stock up 8.7% over the past month. The stock hit a new 52-week high of $88.78 in the previous session. Houlihan Lokey has gained 31.9% since the start of the year compared to the 19% move for the Zacks Finance sector and the 13.4% return for the Zacks Financial - Miscellaneous Services industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 11, 2021, Houlihan Lokey reported EPS of $1.51 versus consensus estimate of $1.12 while it beat the consensus revenue estimate by 39.32%.

For the current fiscal year, Houlihan Lokey is expected to post earnings of $4.27 per share on $1.5 billion in revenues. This represents a -7.58% change in EPS on a -1.47% change in revenues. For the next fiscal year, the company is expected to earn $4.34 per share on $1.52 billion in revenues. This represents a year-over-year change of 1.44% and 1.36%, respectively.

Valuation Metrics

Houlihan Lokey may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Houlihan Lokey has a Value Score of C. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 20.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 18.2X versus its peer group's average of 9.3X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Houlihan Lokey currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Houlihan Lokey passes the test. Thus, it seems as though Houlihan Lokey shares could have a bit more room to run in the near term.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Houlihan Lokey, Inc. (HLI) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.

Advertisement