Houlihan Lokey (HLI): Exploring Valuation as Investors Reassess Growth Prospects

Houlihan Lokey (HLI) shares have been relatively steady lately, trading near $180 with modest moves over the past week and month. Investors seem to be weighing the company’s recent performance along with broader market trends to assess where things might go next.

See our latest analysis for Houlihan Lokey.

While Houlihan Lokey’s share price has pulled back in recent months, momentum over the past year has been mixed, with a modest year-to-date gain and a 1-year total shareholder return of -3.8% suggesting investors are reassessing expectations after a long period of strong multi-year growth. That said, the impressive 94% total return over three years and more than 200% five-year gain show the stock has delivered substantial long-term value for patient shareholders as the company continues to post solid annual results.

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With shares trading near recent highs but analyst targets suggesting room to run, investors are left wondering if Houlihan Lokey is undervalued, or if the market is already factoring in the company’s future growth potential.

Most Popular Narrative: 16% Undervalued

With Houlihan Lokey’s fair value pegged at $214.57 and shares recently closing at $180.33, the most widely followed narrative points to further upside for investors. The stage is set, but what’s fueling this optimistic target?

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.

Curious what assumptions underpin that bullish fair value? The narrative hints at sustained growth, robust fee stability, and margin expansion, driven by levers most investors overlook. Want to see which projections tie it all together?

Result: Fair Value of $214.57 (UNDERVALUED)

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

However, persistent talent costs or a slowdown in U.S. deal flow could quickly challenge the optimistic view that underpins Houlihan Lokey’s long-term outlook.

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

Another View: Market Ratios Signal Caution

Looking beyond analyst targets, Houlihan Lokey is currently priced at a ratio of 29.6, which stands well above the industry average of 24.2 and the peer group’s 17.6. Even more telling, it exceeds the fair ratio of 16.4. This is a level the market could eventually move toward. This gap highlights real valuation risks that investors should not ignore. Could expectations be running ahead of real earnings power?

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

Build Your Own Houlihan Lokey Narrative

If you see the story differently, or want to dive into the numbers and build your own outlook, it's easy to put together a personalized analysis in just a few minutes. Do it your way

A good starting point is our analysis highlighting 2 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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