Comparing Houlihan Lokey (NYSE:HLI) and Lazard (LAZ)

Houlihan Lokey (NYSE: HLI) and Lazard (NYSE:LAZ) are both mid-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, profitability, earnings, dividends, risk and institutional ownership.

Volatility & Risk

Houlihan Lokey has a beta of 0.31, indicating that its share price is 69% less volatile than the S&P 500. Comparatively, Lazard has a beta of 1.84, indicating that its share price is 84% more volatile than the S&P 500.

Institutional & Insider Ownership

32.7% of Houlihan Lokey shares are held by institutional investors. Comparatively, 69.1% of Lazard shares are held by institutional investors. 69.7% of Houlihan Lokey shares are held by company insiders. Comparatively, 2.5% of Lazard shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Houlihan Lokey and Lazard’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Houlihan Lokey 14.10% 18.63% 11.83%
Lazard 17.39% 39.33% 11.16%

Dividends

Houlihan Lokey pays an annual dividend of $0.80 per share and has a dividend yield of 2.3%. Lazard pays an annual dividend of $1.64 per share and has a dividend yield of 3.9%. Houlihan Lokey pays out 41.7% of its earnings in the form of a dividend. Lazard pays out 46.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Lazard has raised its dividend for 6 consecutive years. Lazard is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Houlihan Lokey and Lazard, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Houlihan Lokey 0 2 2 0 2.50
Lazard 0 3 4 0 2.57

Houlihan Lokey presently has a consensus target price of $38.00, suggesting a potential upside of 7.07%. Lazard has a consensus target price of $46.29, suggesting a potential upside of 9.11%. Given Lazard’s stronger consensus rating and higher possible upside, analysts clearly believe Lazard is more favorable than Houlihan Lokey.

Valuation & Earnings

This table compares Houlihan Lokey and Lazard’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Houlihan Lokey $907.54 million 0.97 $47.68 million $1.92 18.48
Lazard $2.64 billion 2.09 $458.07 million $3.53 12.02

Lazard has higher revenue and earnings than Houlihan Lokey. Lazard is trading at a lower price-to-earnings ratio than Houlihan Lokey, indicating that it is currently the more affordable of the two stocks.

Summary

Lazard beats Houlihan Lokey on 13 of the 17 factors compared between the two stocks.

Houlihan Lokey Company Profile

Houlihan Lokey, Inc. is a global independent investment bank that focuses on mergers and acquisitions (M&A), financings, financial restructurings and financial advisory services. The Company operates through three segments: Corporate Finance, Financial Restructuring and Financial Advisory Services. The Company serves a set of clients across the world, including corporations, financial sponsors and government agencies. The Company provides financial professionals with an integrated platform that enables them to deliver advice to its clients. The Company also offers intellectual property advisory services. The Corporate Finance activities include two categories: M&A and capital markets advisory. The Financial Advisory Services segment includes financial opinions, and a range of valuation and financial consulting services in the United States. The Financial Restructuring segment provides advice to debtors and creditors in connection with recapitalization/deleveraging transactions.

Lazard Company Profile

Lazard Ltd (Lazard) is a financial advisory and asset management company. The Company operates through two segments: Financial Advisory and Asset Management. It serves a range of clients around the world, including corporations, governments, institutions, partnerships and individuals. The Financial Advisory business segment offers corporate, partnership, institutional, government, sovereign and individual clients across the globe a range of financial advisory services regarding mergers and acquisitions (M&A) and other strategic matters, restructurings, capital structure, capital raising and various other financial matters to corporate, partnership, institutional, government, sovereign and individual clients. The Asset Management business provides investment solutions and investment management services in equity and fixed income strategies, alternative investments and private equity funds to corporations, public funds and sovereign entities.

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