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

Analyst Ratings

This is a summary of current ratings and recommmendations for Lazard and Houlihan Lokey, as reported by MarketBeat.com.

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

Lazard presently has a consensus price target of $46.29, suggesting a potential upside of 1.73%. Houlihan Lokey has a consensus price target of $38.00, suggesting a potential upside of 6.17%. Given Houlihan Lokey’s higher probable upside, analysts clearly believe Houlihan Lokey is more favorable than Lazard.

Institutional and Insider Ownership

73.7% of Lazard shares are owned by institutional investors. Comparatively, 32.1% of Houlihan Lokey shares are owned by institutional investors. 2.5% of Lazard shares are owned by company insiders. Comparatively, 69.7% of Houlihan Lokey shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility & Risk

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

Profitability

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

Net Margins Return on Equity Return on Assets
Lazard 17.39% 39.33% 11.16%
Houlihan Lokey 14.10% 18.94% 11.62%

Dividends

Lazard pays an annual dividend of $1.64 per share and has a dividend yield of 3.6%. Houlihan Lokey pays an annual dividend of $0.80 per share and has a dividend yield of 2.2%. Lazard pays out 46.5% of its earnings in the form of a dividend. Houlihan Lokey pays out 41.7% 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. Houlihan Lokey has increased its dividend for 6 consecutive years.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lazard $2.64 billion 2.24 $458.07 million $3.53 12.89
Houlihan Lokey $907.19 million 0.92 $44.89 million $1.92 18.64

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 11 of the 17 factors compared between the two stocks.

About Lazard

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.

About Houlihan Lokey

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.

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