A Fresh Look at Houlihan Lokey’s (HLI) Valuation Following Key European Leadership Hires

Houlihan Lokey (NYSE:HLI) recently welcomed Neil Price and Seran Ahmetrasit into senior roles within its European business. This development highlights the firm’s active push to deepen client relationships and grow its footprint across the region.

See our latest analysis for Houlihan Lokey.

These high-profile hires come as Houlihan Lokey’s share price has seen some turbulence this year, with a recent pullback capping what has otherwise been a solid long-term run. While the 1-year total shareholder return is down 6.8%, those who have held on for three or five years have enjoyed gains of 83% and 194% respectively. This reflects strong momentum over time even as short-term sentiment adjusts to market shifts and new strategic moves.

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But with Houlihan Lokey’s share price pulling back despite steady long-term gains and ongoing growth initiatives, is this the right moment for investors to consider the stock undervalued? Or is the market already factoring in its future prospects?

Most Popular Narrative: 17.7% Undervalued

Houlihan Lokey’s current price of $173.61 sits well below the most widely followed narrative’s fair value of $210.86. The narrative attributes this gap to a mix of sector expansion, recruitment, and financial discipline, creating a bold backdrop for a potential rerating. Here is one catalyst at the heart of the outlook:

Ongoing global expansion, sector diversification, and talent recruitment position Houlihan Lokey for sustained revenue growth and increased market share. Strong pipelines from succession planning, resilient restructuring activity, and enhanced client engagement are stabilizing fee income and supporting earnings despite macroeconomic shifts.

Read the complete narrative.

Want to know what’s driving a fair value so far above today’s stock price? The narrative is betting on ambitious expansion, deeper client relationships, and a surge in profits. Which single financial metric is expected to break away from industry norms and rewrite HLI’s valuation story? Find out what’s fueling these bullish price targets and see if consensus expectations are really that bold.

Result: Fair Value of $210.86 (UNDERVALUED)

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

However, muted deal activity outside the U.S. and persistent high compensation costs could threaten Houlihan Lokey's margin expansion and near-term growth outlook.

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

Another View: Are Multiples Sending a Different Signal?

While the narrative points to Houlihan Lokey being undervalued, its current price-to-earnings ratio of 28.5x looks expensive compared to both the industry average of 23.4x and its peers at 17.2x. Even against a fair ratio of 16.3x, the premium is hard to ignore, raising questions about whether investors are paying too much for future growth or simply pricing in quality. Is this a warning sign, or is there more upside still to be had?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Houlihan Lokey Narrative

If you’re ready to take a hands-on approach or want to see how your perspective stacks up, building your own data-driven narrative can be done in under three minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Houlihan Lokey.

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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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