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Houlihan Lokey (HLI) Hits Fresh High: Is There Still Room to Run?
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Shares of Houlihan Lokey (HLI - Free Report) have been strong performers lately, with the stock up 17.7% over the past month. The stock hit a new 52-week high of $122.62 in the previous session. Houlihan Lokey has gained 15.5% since the start of the year compared to the 3% move for the Zacks Finance sector and the 1.9% return for the Zacks Financial - Miscellaneous Services industry.
What's Driving the Outperformance?
The stock has an impressive 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 October 28, 2021, Houlihan Lokey reported EPS of $1.71 versus consensus estimate of $1.19.
For the current fiscal year, Houlihan Lokey is expected to post earnings of $6.68 per share on $2.15 billion in revenues. This represents a 44.81% change in EPS on a 40.65% change in revenues. For the next fiscal year, the company is expected to earn $5.82 per share on $2.12 billion in revenues. This represents a year-over-year change of -12.93% and -1.14%, 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 is due for a pullback from this level.
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. Investors should consider the style scores a valuable tool that can help you to 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 A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 17.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 24.5X versus its peer group's average of 11.9X. 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 look at the Zacks Rank for the stock, 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 potential in the weeks and months to come.
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Houlihan Lokey (HLI) Hits Fresh High: Is There Still Room to Run?
Shares of Houlihan Lokey (HLI - Free Report) have been strong performers lately, with the stock up 17.7% over the past month. The stock hit a new 52-week high of $122.62 in the previous session. Houlihan Lokey has gained 15.5% since the start of the year compared to the 3% move for the Zacks Finance sector and the 1.9% return for the Zacks Financial - Miscellaneous Services industry.
What's Driving the Outperformance?
The stock has an impressive 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 October 28, 2021, Houlihan Lokey reported EPS of $1.71 versus consensus estimate of $1.19.
For the current fiscal year, Houlihan Lokey is expected to post earnings of $6.68 per share on $2.15 billion in revenues. This represents a 44.81% change in EPS on a 40.65% change in revenues. For the next fiscal year, the company is expected to earn $5.82 per share on $2.12 billion in revenues. This represents a year-over-year change of -12.93% and -1.14%, 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 is due for a pullback from this level.
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. Investors should consider the style scores a valuable tool that can help you to 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 A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 17.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 24.5X versus its peer group's average of 11.9X. 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 look at the Zacks Rank for the stock, 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 potential in the weeks and months to come.