Houlihan Lokey (NYSE: HLI) and PJT Partners (NYSE:PJT) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, dividends, earnings, valuation, profitability and analyst recommendations.

Profitability

This table compares Houlihan Lokey and PJT Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Houlihan Lokey 14.10% 18.63% 11.83%
PJT Partners -0.27% -115.47% 11.68%

Insider and Institutional Ownership

32.2% of Houlihan Lokey shares are owned by institutional investors. Comparatively, 59.2% of PJT Partners shares are owned by institutional investors. 69.7% of Houlihan Lokey shares are owned by company insiders. Comparatively, 3.3% of PJT Partners shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Houlihan Lokey and PJT Partners’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Houlihan Lokey $907.54 million 2.66 $128.48 million $1.92 18.78
PJT Partners $524.92 million 1.36 -$1.85 million ($0.10) -386.60

Houlihan Lokey has higher revenue and earnings than PJT Partners. PJT Partners is trading at a lower price-to-earnings ratio than Houlihan Lokey, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Houlihan Lokey and PJT Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Houlihan Lokey 0 1 2 0 2.67
PJT Partners 0 0 1 0 3.00

Houlihan Lokey currently has a consensus target price of $38.00, indicating a potential upside of 5.41%. PJT Partners has a consensus target price of $45.00, indicating a potential upside of 16.40%. Given PJT Partners’ stronger consensus rating and higher probable upside, analysts plainly believe PJT Partners is more favorable than Houlihan Lokey.

Dividends

Houlihan Lokey pays an annual dividend of $0.80 per share and has a dividend yield of 2.2%. PJT Partners pays an annual dividend of $0.20 per share and has a dividend yield of 0.5%. Houlihan Lokey pays out 41.7% of its earnings in the form of a dividend. PJT Partners pays out -200.0% 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.

Risk and Volatility

Houlihan Lokey has a beta of 0.31, indicating that its stock price is 69% less volatile than the S&P 500. Comparatively, PJT Partners has a beta of 0.34, indicating that its stock price is 66% less volatile than the S&P 500.

Summary

Houlihan Lokey beats PJT Partners on 10 of the 15 factors compared between the two stocks.

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.

PJT Partners Company Profile

PJT Partners Inc. is an advisory-focused investment bank. The Company offers an array of strategic advisory, restructuring and special situations and private fund advisory and placement services to corporations, financial sponsors, institutional investors and governments. It provides, through Park Hill Group, private fund advisory and placement services for alternative investment managers, including private equity funds, real estate funds and hedge funds. Its advisory business offers a range of financial advisory and transaction execution capability, including mergers and acquisitions, joint ventures, minority investments, asset swaps, divestitures, takeover defenses, corporate finance advisory, private placements and distressed sales. Its Restructuring and Special Situations Group’s services include advising companies, creditors and financial sponsors on recapitalizations, reorganizations, exchange offers, debt repurchases, capital raises, and distressed mergers and acquisitions.

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