Houlihan Lokey (HLI) Expands In France As Its Undervalued Narrative Stays In Focus

Houlihan Lokey’s European hire puts France-focused sponsors in the spotlight

Houlihan Lokey (HLI) has drawn investor attention after announcing Jean-Baptiste Didier as Managing Director in its Financial Sponsors Group in Paris, where he will lead sponsor coverage activities in France.

The hiring of Jean-Baptiste Didier comes as Houlihan Lokey’s stock trades at US$136.86. Recent momentum has improved, with a 1 month share price return of 6.71% and a 7 day share price return of 4.62%. This comes even though the year-to-date share price return is down 22.39% and the 1 year total shareholder return is down 29.48%, following stronger 3 year and 5 year total shareholder returns of 38.27% and 66.46% respectively.

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Houlihan Lokey has bounced in the past month and now trades below both analyst targets and some intrinsic value estimates. Is that discount a genuine margin of safety or a value trap once the numbers are unpacked?

Most Popular Narrative: 11.4% Undervalued

The most followed narrative puts Houlihan Lokey’s fair value at $154.50, compared with the recent $136.86 close, and frames that gap around specific growth and margin assumptions.

Increasing global corporate complexity and cross-border transactions are driving ongoing demand for independent advisory expertise, as evidenced by resilient revenues and continued international hiring and expansion initiatives, these factors are expected to support sustained top-line revenue growth.

Read the complete narrative. Read the complete narrative.

Want to see what sits behind that valuation gap? The narrative leans on compounded revenue growth, rising margins and a future earnings multiple that assumes advisory demand stays robust.

Result: Fair Value of $154.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, you still need to weigh the risk that Houlihan Lokey’s heavy exposure to U.S. M&A and its high cost base could pressure margins if deal activity softens.

Find out about the key risks to this Houlihan Lokey narrative.

Next Steps

With sentiment on Houlihan Lokey mixed, this is a good moment to move quickly and test the story against the data yourself. To see where other investors are finding reasons for optimism, review the 3 key rewards

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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.

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