Houlihan Lokey (HLI) has just wrapped up FY 2026 with fourth quarter revenue of US$635.6 million and basic EPS of US$1.50. Trailing 12 month revenue came in at about US$2.6 billion and EPS at US$6.40. Over recent periods, revenue has moved between US$605.3 million and US$717.1 million per quarter, with quarterly EPS ranging from US$1.47 to US$1.84. Trailing 12 month EPS has stepped up from US$5.49 to US$6.40, giving investors a view of how the earnings base has evolved. With a trailing net margin of 16.3% and steady profitability, the latest results may prompt investors to consider how durable those margins look in the context of the current earnings story.

See our full analysis for Houlihan Lokey.

With the headline numbers set, the next step is to see how these results line up against the dominant narratives around Houlihan Lokey, highlighting which stories fit the data and which might need a rethink.

Margins Steady Around 16% Earnings Base

• Over the last 12 months, Houlihan Lokey generated about US$2.6b of revenue and US$425.7 million of net income, which works out to a trailing net margin of 16.3% compared with 16.7% in the prior year.
• Bulls highlight that resilient profitability can support their view of long term margin strength, and the current data partly fits that, but not perfectly.
  • On the supportive side, trailing earnings growth of 6.5% over the past year sits above the 1.7% per year pace over five years, which bullish investors point to when arguing that the earnings base is progressing.
  • At the same time, the small slip from a 16.7% to 16.3% net margin adds a check on the bullish idea that margins are clearly moving higher, so anyone leaning bullish needs to decide how meaningful that 0.4 percentage point change really is for the long term story.

Bulls argue that this mix of steady margins and faster recent earnings growth could be the early stage of the earnings path they are looking for, especially if revenues keep scaling without eroding profitability, which is what the stronger years in their narrative assume. 🐂 Houlihan Lokey Bull Case

Valuation Sits Between Industry And Peers

• The stock trades at US$153.50 with a P/E of 25.1x, compared with a 42.8x average for the broader US Capital Markets industry and a 14.1x average for closer peers, while the supplied DCF fair value is US$131.12.
• Bears focus heavily on this setup and the data clearly gives them a few points to work with.
  • Critics highlight that the share price stands above the DCF fair value of US$131.12, which they see as a gap that needs to be justified by future execution, especially when trailing earnings growth has been modest at 6.5% over the last year.
  • They also point out that although the 25.1x P/E is lower than the wider industry at 42.8x, it is still well above the 14.1x peer average, so anyone buying here is paying a premium to similar companies even before considering the DCF gap.

Skeptics argue that, with the share price above the DCF fair value and the P/E sitting between peers and the wider industry, the burden is on future results to make that premium look comfortable. 🐻 Houlihan Lokey Bear Case

Forecast Growth Versus Recent Track Record

• Over the last year, earnings grew 6.5% compared with a 1.7% annual pace over five years, while analysts are expecting about 12.3% yearly earnings growth and 10.9% yearly revenue growth from here.
• Consensus narrative watchers will notice both alignment and friction between these forecasts and the trailing figures.
  • On one hand, the acceleration from 1.7% to 6.5% earnings growth supports the idea that the business is operating off a stronger base, which lines up with expectations for double digit growth in both revenue and earnings.
  • On the other hand, current net margin of 16.3% is slightly below the prior 16.7%, so the forecast for higher future margins asks you to assume that profitability improves from here even though the latest 12 month comparison does not yet show that move.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Houlihan Lokey on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Seen enough to get a feel for the bullish and cautious angles here, but still unsure where you land? Take a closer look at the underlying data, weigh those 1 or more potential rewards, and use the 4 key rewards.

See What Else Is Out There

Houlihan Lokey carries a 25.1x P/E above close peers, trades above its DCF fair value, and shows slightly softer margins, which leaves limited valuation comfort.

If you want ideas where pricing looks more forgiving and the valuation gap could work in your favor, start comparing opportunities using the 51 high quality undervalued stocks today.

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.