Financial Survey: Houlihan Lokey (HLI) and FBR & Co (FBRC)
Houlihan Lokey (NYSE: HLI) and FBR & Co (NASDAQ:FBRC) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, profitability, institutional ownership, risk, analyst recommendations and earnings.
Houlihan Lokey pays an annual dividend of $0.80 per share and has a dividend yield of 2.3%. FBR & Co pays an annual dividend of $0.80 per share and has a dividend yield of 4.6%. Houlihan Lokey pays out 41.7% of its earnings in the form of a dividend. FBR & Co pays out -8.9% 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. FBR & Co is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Houlihan Lokey and FBR & Co’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|FBR & Co||3.49%||4.34%||0.49%|
Institutional & Insider Ownership
32.7% of Houlihan Lokey shares are owned by institutional investors. Comparatively, 72.4% of FBR & Co shares are owned by institutional investors. 69.7% of Houlihan Lokey shares are owned by insiders. Comparatively, 13.9% of FBR & Co shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Volatility and Risk
Houlihan Lokey has a beta of 0.31, indicating that its share price is 69% less volatile than the S&P 500. Comparatively, FBR & Co has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500.
This is a summary of recent ratings for Houlihan Lokey and FBR & Co, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|FBR & Co||0||1||0||0||2.00|
Houlihan Lokey presently has a consensus target price of $38.00, suggesting a potential upside of 9.01%. Given Houlihan Lokey’s stronger consensus rating and higher probable upside, equities analysts clearly believe Houlihan Lokey is more favorable than FBR & Co.
Earnings and Valuation
This table compares Houlihan Lokey and FBR & Co’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Houlihan Lokey||$907.54 million||0.95||$47.68 million||$1.92||18.16|
|FBR & Co||N/A||N/A||N/A||($9.00)||-1.95|
Houlihan Lokey has higher revenue and earnings than FBR & Co. FBR & Co is trading at a lower price-to-earnings ratio than Houlihan Lokey, indicating that it is currently the more affordable of the two stocks.
Houlihan Lokey beats FBR & Co on 9 of the 13 factors compared between the two stocks.
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.
About FBR & Co
FBR & Co. is an investment banking and institutional brokerage company. The Company focuses on the equity capital markets. The Company operates through two segments: capital markets, which includes investment banking, institutional brokerage and research, and principal investing. Through its broker-dealer operating subsidiaries, the Company focuses its business on providing: capital raising services, including underwriting and placement of public and private equity, equity-linked and debt securities; financial advisory services, including merger and acquisition (M&A) advisory, restructuring, liability management, recapitalization and strategic alternative analysis; institutional sales and trading services focused on equities, equity-linked securities, listed options, high-yield bonds, senior debt and bank loans, as well as securities lending activities, and differentiated securities research.
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