Critical Contrast: Moelis & (MC) vs. Houlihan Lokey (HLI)
Moelis & (NYSE: MC) and Houlihan Lokey (NYSE:HLI) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.
Insider & Institutional Ownership
90.8% of Moelis & shares are held by institutional investors. Comparatively, 32.2% of Houlihan Lokey shares are held by institutional investors. 64.5% of Moelis & shares are held by insiders. Comparatively, 69.7% of Houlihan Lokey shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Moelis & and Houlihan Lokey’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Moelis &||$700.69 million||1.58||$55.04 million||$2.00||20.10|
|Houlihan Lokey||$907.54 million||1.00||$47.68 million||$1.92||19.02|
Moelis & has higher revenue, but lower earnings than Houlihan Lokey. Houlihan Lokey is trading at a lower price-to-earnings ratio than Moelis &, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and price targets for Moelis & and Houlihan Lokey, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Moelis & currently has a consensus target price of $37.57, suggesting a potential downside of 6.54%. Houlihan Lokey has a consensus target price of $39.00, suggesting a potential upside of 6.82%. Given Houlihan Lokey’s stronger consensus rating and higher probable upside, analysts clearly believe Houlihan Lokey is more favorable than Moelis &.
Risk and Volatility
Moelis & has a beta of 1.88, indicating that its stock price is 88% more volatile than the S&P 500. Comparatively, Houlihan Lokey has a beta of 0.34, indicating that its stock price is 66% less volatile than the S&P 500.
This table compares Moelis & and Houlihan Lokey’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Moelis & pays an annual dividend of $1.48 per share and has a dividend yield of 3.7%. Houlihan Lokey pays an annual dividend of $0.80 per share and has a dividend yield of 2.2%. Moelis & pays out 74.0% 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 2 consecutive years.
Moelis & beats Houlihan Lokey on 9 of the 17 factors compared between the two stocks.
Moelis & Company Profile
Moelis & Company is an investment banking advisory company. The Company provides strategic and financial advice to a client base, including corporations, governments and financial sponsors. The Company offers financial advisory services across various industry sectors. It advices its clients on decisions, including mergers and acquisitions (M&A), recapitalizations and restructurings, and other corporate finance matters. With 17 offices located in North and South America, Europe, the Middle East, Asia and Australia, the Company provided information flow and cross-border solutions as of December 31, 2016. The Company offers advisory services in all industries, including consumer, retail and restaurants; energy, power and infrastructure; financial institutions; financial sponsors; general industrials; healthcare; real estate, gaming, lodging and leisure, and technology, media and telecommunications. It advises clients on all aspects of public and private debt and equity transactions.
Houlihan Lokey Company Profile
Houlihan Lokey, Inc. is a global independent investment bank that focuses on mergers and acquisitions (M&A), capital markets, financial restructuring, valuation, and strategic consulting. The Company operates through four segments: Corporate Finance, Financial Restructuring, Financial Advisory Services and Strategic Consulting. The Company provides financial professionals with an integrated platform that enables them to deliver advice to its clients. 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. The Strategic Consulting segment thinks beyond traditional business models to help companies compete in new ways and exploit opportunities to achieve profitable growth.
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