Houlihan Lokey has gotten torched over the last six months - since February 2026, its stock price has dropped 22.2% to $129.10 per share. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Is now the time to buy Houlihan Lokey, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is Houlihan Lokey Not Exciting?
Even though the stock has become cheaper, we’re cautious about Houlihan Lokey. Here are two reasons why HLI doesn’t excite us, plus one stock we’d rather own.
1. EPS Barely Growing
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Houlihan Lokey’s EPS grew at an unimpressive 5.3% compounded annual growth rate over the last five years, lower than its 8.4% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
2. Growing TBVPS Reflects Strong Asset Base
Tangible book value per share (TBVPS) serves as a key indicator of a financial institution’s strength, representing the hard assets available to shareholders after removing intangible assets that could evaporate during economic distress.
Although Houlihan Lokey’s TBVPS increased by a meager 4.5% annually over the last five years, the good news is that its growth has recently accelerated as TBVPS grew at an exceptional 19.7% annual clip over the past two years (from $6.55 to $9.38 per share).
Final Judgment
Houlihan Lokey isn’t a terrible business, but it doesn’t pass our quality test. After the recent drawdown, the stock trades at 16.8× forward P/E (or $129.10 per share). Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We’re pretty confident there are superior stocks to buy right now. We’d recommend looking at a top digital advertising platform riding the creator economy.
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