Value
7.5/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 5.8 |
| P/S | 7.8 |
| Fwd P/E | 8.1 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 14.6x
- ▸PEG: 0.28
- ▸Attractively valued
HLI · Why this verdict
Why Houlihan Lokey (HLI) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Houlihan Lokey carries a high-quality franchise with strong operating margins and a favorable long-term earnings record, but a confirmed technical downtrend, a recent earnings miss, declining revenue, and a risk/reward just below the asymmetry threshold argue for holding existing positions and waiting for momentum to stabilize before committing new capital.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business generates operating margins of 16% and holds a Piotroski F-Score of 7/9, while trading at a forward price-to-earnings of approximately 14.8x with a PEG of 0.29 — positioning that screens attractively valued relative to the quality of the earnings stream. Quality | Operating margins should sustain above 14% and earnings per share estimates should stabilize or rise over the next four quarters, confirming the quality profile is intact. | →Stable |
| CounterCapital markets advisory businesses are highly sensitive to transaction volumes; if M&A and restructuring activity continues to slow, the 16% operating margin could compress materially, eroding the quality case and making the current valuation less attractive than it appears. | ||
Revenue declined approximately 5% year-over-year, introducing a meaningful growth headwind that contrasts with the strong earnings per share growth profile and raises questions about whether earnings expansion is being driven by margin improvement and cost control rather than top-line momentum. Growth | Revenue should return to flat or positive year-over-year growth within two quarters, demonstrating that the decline was cyclical rather than structural. | →Stable |
| CounterRevenue growth recovering above 5% year-over-year for 2 consecutive quarters would indicate the top-line headwind has fully reversed, falsifying the structural concern embedded in this pillar. | ||
A death cross is in place, the stock trades below all major moving averages with the long-term trend slope declining approximately 3.9% over 30 days, and the RSI at 34 reflects near-oversold conditions — a combination that signals near-term price momentum is firmly negative, despite rising on-balance volume suggesting latent institutional demand. Momentum | For the technical picture to improve, the stock must reclaim the 200-day moving average and that average's slope must turn positive, events that would confirm the downtrend has exhausted rather than deepened. | →Stable |
| CounterIf the stock reclaims the 200-day moving average and holds above it for 4 consecutive weeks, the downtrend thesis is invalidated and the technical picture shifts from a falling-knife setup to a genuine recovery. | ||
With only 7.3% headroom to the analyst take-profit target and a risk/reward of approximately 1.1-to-1, the current setup offers insufficient compensation relative to the downside risk from the confirmed technical breakdown — this is a hold situation, not a new-entry opportunity. Price targets | For asymmetry to justify new capital, the stock must pull back sufficiently to create at least 20% upside to the target, or the analyst consensus target must be revised meaningfully higher. | →Stable |
| CounterIf the stock pulls back more than 15% from current levels while fundamentals hold steady, the upside to the target would expand above 22% and the risk/reward would reset above 1.5-to-1, invalidating the thin-asymmetry concern. | ||
The business generates operating margins of 16% and holds a Piotroski F-Score of 7/9, while trading at a forward price-to-earnings of approximately 14.8x with a PEG of 0.29 — positioning that screens attractively valued relative to the quality of the earnings stream.
→StableQuality
- Expectation
- Operating margins should sustain above 14% and earnings per share estimates should stabilize or rise over the next four quarters, confirming the quality profile is intact.
CounterCapital markets advisory businesses are highly sensitive to transaction volumes; if M&A and restructuring activity continues to slow, the 16% operating margin could compress materially, eroding the quality case and making the current valuation less attractive than it appears.
Revenue declined approximately 5% year-over-year, introducing a meaningful growth headwind that contrasts with the strong earnings per share growth profile and raises questions about whether earnings expansion is being driven by margin improvement and cost control rather than top-line momentum.
→StableGrowth
- Expectation
- Revenue should return to flat or positive year-over-year growth within two quarters, demonstrating that the decline was cyclical rather than structural.
CounterRevenue growth recovering above 5% year-over-year for 2 consecutive quarters would indicate the top-line headwind has fully reversed, falsifying the structural concern embedded in this pillar.
A death cross is in place, the stock trades below all major moving averages with the long-term trend slope declining approximately 3.9% over 30 days, and the RSI at 34 reflects near-oversold conditions — a combination that signals near-term price momentum is firmly negative, despite rising on-balance volume suggesting latent institutional demand.
→StableMomentum
- Expectation
- For the technical picture to improve, the stock must reclaim the 200-day moving average and that average's slope must turn positive, events that would confirm the downtrend has exhausted rather than deepened.
CounterIf the stock reclaims the 200-day moving average and holds above it for 4 consecutive weeks, the downtrend thesis is invalidated and the technical picture shifts from a falling-knife setup to a genuine recovery.
With only 7.3% headroom to the analyst take-profit target and a risk/reward of approximately 1.1-to-1, the current setup offers insufficient compensation relative to the downside risk from the confirmed technical breakdown — this is a hold situation, not a new-entry opportunity.
→StablePrice targets
- Expectation
- For asymmetry to justify new capital, the stock must pull back sufficiently to create at least 20% upside to the target, or the analyst consensus target must be revised meaningfully higher.
CounterIf the stock pulls back more than 15% from current levels while fundamentals hold steady, the upside to the target would expand above 22% and the risk/reward would reset above 1.5-to-1, invalidating the thin-asymmetry concern.
Per-dimension breakdown
Quality
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.1 |
| ROA | 7.0 |
| Gross margin | 10.0 |
| Op margin | 9.0 |
| Net margin | 8.1 |
| Current ratio | 5.1 |
| Moat | 6.6 |
| Piotroski F | 7.8 |
- ▸Strong margins: 16%
- ▸Strong Piotroski F-Score: 7/9
Growth
5.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.4 |
| EPS growth | 10.0 |
- ▸Declining revenue: -5%
Momentum
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -4.1%/30d — confirmed downtrend
Sentiment
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 8.1 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 24%
Insider
5.0/10data confidence 50%Peer rank
2.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.2 |
| quality rank | 5.3 |
| growth rank | 1.4 |
Technical
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.3 |
| support resistance | 6.4 |
| 52w position | 3.2 |
Risk (lower is worse)
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.3 |
| days to cover | 8.7 |
| volatility | 5.1 |
| put call | 10.0 |
| implied vol | 6.2 |
| max pain risk | 7.0 |
| beta | 7.3 |
| debt equity | 9.2 |
Catalyst
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 6.5 |
| dividend safety | 7.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 203.0%
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:33d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.3<4.5
- ASYMMETRY:1.4<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
1.40
Upside
+8.3%
Downside
5.9%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 45
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: INSIDER:OK. Top dim: Risk (lower is worse) at 7.7; weakest: Peer rank at 2.7. No conviction either direction.
The strongest dimensions are Risk (lower is worse) at 7.7, Value at 7.5, and Quality at 7.5; the weakest are Peer rank at 2.7, Momentum at 3.3, and Insider at 5.0. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 1.40 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The business generates operating margins of 16% and holds a Piotroski F-Score of 7/9, while trading at a forward price-to-earnings of approximately 14.8x with a PEG of 0.29 — positioning that screens attractively valued relative to the quality of the earnings stream.
Trip ifOperating margin falls below 12% for 2 consecutive quarters.
- P2Revenue declined approximately 5% year-over-year, introducing a meaningful growth headwind that contrasts with the strong earnings per share growth profile and raises questions about whether earnings expansion is being driven by margin improvement and cost control rather than top-line momentum.
Trip ifRevenue growth turns positive above 5% year-over-year for 2 consecutive quarters, indicating the top-line decline has reversed.
- P3A death cross is in place, the stock trades below all major moving averages with the long-term trend slope declining approximately 3.9% over 30 days, and the RSI at 34 reflects near-oversold conditions — a combination that signals near-term price momentum is firmly negative, despite rising on-balance volume suggesting latent institutional demand.
Trip ifStock reclaims the 200-day moving average and holds above it for 4 consecutive weeks, signaling the confirmed downtrend has reversed.
- P4With only 7.3% headroom to the analyst take-profit target and a risk/reward of approximately 1.1-to-1, the current setup offers insufficient compensation relative to the downside risk from the confirmed technical breakdown — this is a hold situation, not a new-entry opportunity.
Trip ifStock pulls back more than 15% from current levels, expanding upside to the target above 22% and restoring an asymmetry ratio greater than 1.5-to-1.