Houlihan Lokey (HLI) has been recognized as the leading M&A adviser by deal volume in North America for the first half of 2026, highlighting its role across a wide range of client transactions.

Despite Houlihan Lokey’s leading M&A role, the stock has faced pressure, with the share price down 10.51% over the past week and 28.84% year to date. However, the 5-year total shareholder return of 58.27% reflects a stronger longer-term picture.

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The recent slide in Houlihan Lokey’s share price raises a simple fork in the road. Is this just the air coming out after years of gains, or does the current valuation still leave meaningful upside ahead?

Most Popular Narrative: 18.8% Undervalued

Houlihan Lokey’s most followed valuation narrative points to a fair value of $154.50 compared with the recent close at $125.49, which helps explain why some investors are reassessing the recent pullback.

Expansion of business lines (notably Capital Solutions and secondaries) and continued emphasis on senior talent recruitment are enhancing sector and product breadth. This is positioning the firm to capture incremental market share and drive incremental revenue growth. Investment in strategic client engagement (such as large-scale flagship conferences) and enhanced digital capabilities are expected to reinforce client relationships and operational efficiency. This is supporting both revenue growth through deeper client penetration and stabilization or improvement of net margins.

Want to see what is baked into that $154.50 figure for Houlihan Lokey? The narrative hinges on compounded revenue growth, thicker margins, and a lower future earnings multiple that still needs to line up with today’s share price.

Result: Fair Value of $154.50 (UNDERVALUED)

However, this Houlihan Lokey narrative can be knocked off course if U.S. focused M&A activity stays muted or if high compensation costs squeeze margins.

Another View: What Houlihan Lokey’s P/E Ratio Is Telling You

The first narrative paints Houlihan Lokey as 18.8% undervalued, yet the current P/E of 21.6x is above its fair ratio of 15.4x and above the peer average of 11.4x, while still below the broader US Capital Markets average of 37.2x. Is that a margin of safety or a valuation risk?

For a closer look at how this compares against peers and what the fair ratio gap could mean in practice, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With the narrative on Houlihan Lokey split between valuation risk and potential opportunity, it makes sense to look at the numbers yourself and move fast. To see what optimistic investors are focusing on, start with the 4 key rewards.

Looking for more investment ideas beyond 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.