Head-To-Head Review: Houlihan Lokey (NYSE:HLI) versus B. Riley Financial (NASDAQ:RILY)

Houlihan Lokey (NYSE:HLIGet Rating) and B. Riley Financial (NASDAQ:RILYGet Rating) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, valuation, institutional ownership, analyst recommendations, risk and dividends.

Dividends

Houlihan Lokey pays an annual dividend of $1.72 per share and has a dividend yield of 2.1%. B. Riley Financial pays an annual dividend of $4.00 per share and has a dividend yield of 8.1%. Houlihan Lokey pays out 26.8% of its earnings in the form of a dividend. B. Riley Financial pays out 67.6% 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 raised its dividend for 7 consecutive years.

Analyst Recommendations

This is a summary of current recommendations and price targets for Houlihan Lokey and B. Riley Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Houlihan Lokey 2 2 3 0 2.14
B. Riley Financial 0 0 0 0 N/A

Houlihan Lokey currently has a consensus price target of $101.60, indicating a potential upside of 22.35%. Given Houlihan Lokey’s higher probable upside, equities analysts clearly believe Houlihan Lokey is more favorable than B. Riley Financial.

Valuation & Earnings

This table compares Houlihan Lokey and B. Riley Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Houlihan Lokey $2.27 billion 2.47 $312.77 million $6.41 13.01
B. Riley Financial $1.74 billion 0.79 $445.05 million $5.92 8.32

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

Profitability

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

Net Margins Return on Equity Return on Assets
Houlihan Lokey 19.28% 33.43% 19.26%
B. Riley Financial 13.40% 26.88% 3.87%

Risk and Volatility

Houlihan Lokey has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, B. Riley Financial has a beta of 1.78, indicating that its share price is 78% more volatile than the S&P 500.

Insider and Institutional Ownership

74.3% of Houlihan Lokey shares are held by institutional investors. Comparatively, 59.1% of B. Riley Financial shares are held by institutional investors. 26.0% of Houlihan Lokey shares are held by company insiders. Comparatively, 27.3% of B. Riley Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Houlihan Lokey beats B. Riley Financial on 12 of the 16 factors compared between the two stocks.

Houlihan Lokey Company Profile (Get Rating)

Houlihan Lokey, Inc., an investment banking company, provides merger and acquisition (M&A), capital market, financial restructuring, and financial and valuation advisory services worldwide. It operates in three segments: Corporate Finance, Financial Restructuring, and Financial and Valuation Advisory. The Corporate Finance segment offers general financial advisory services; and advises public and private institutions on buy-side and sell-side transactions, leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, as well as financial sponsors on various transactions. It also provides financing solutions and capital-raising advisory services for publicly-held and multinational corporations, financial sponsors, and privately-held companies. The Financial Restructuring segment advises debtors, creditors, and other parties-in-interest related to recapitalization/deleveraging transactions. It also provides a range of advisory services, including structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. The Financial and Valuation Advisory segment offers valuations of various assets, such as companies, illiquid debt and equity securities, and intellectual property. It also provides fairness opinions in connection with M&A and other transactions, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations; and other types of financial opinions. In addition, this segment offers dispute resolution consulting services. It serves corporations, financial sponsors, and government agencies. The company was founded in 1972 and is headquartered in Los Angeles, California.

B. Riley Financial Company Profile (Get Rating)

B. Riley Financial, Inc., through its subsidiaries, provides investment banking and financial services to corporate, institutional, and high net worth clients in North America, Australia, and Europe. The company operates in six segments: Capital Markets, Wealth Management, Auction and Liquidation, Financial Consulting, Principal Investments-Communications, and Brands. The Capital Markets segments offers investment banking, corporate finance, financial advisory, research, securities lending and sales, and trading services; merger and acquisitions, restructuring advisory, initial and secondary public offerings, and institutional private placements services; asset management services; and trades in equity securities. The Wealth Management segment provides wealth management and tax services. The Auction and Liquidation Segment offers retail store liquidation, and wholesale and industrial assets disposition services. The Financial Consulting segment provides bankruptcy, forensic accounting, litigation support, operations management and real estate consulting, and valuation and appraisal services. The Principal Investments-Communications segment provides consumer Internet access through United Online under the NetZero and Juno brands; VoIP communication and related products, and subscription services through magicJack; and mobile phone services and devices through Marconi Wireless. The Brands segments provides licensing of a brand investment portfolio, including Catherine Malandrino, English Laundry, Joan Vass, Kensie Girl, Limited Too, and Nanette Lepore. It also offers advisory services; brokerage services; senior secured and second lien secured loans to middle market public and the private U.S. companies; and consulting services. The company was formerly known as Great American Group, Inc. and changed its name to B. Riley Financial, Inc. in November 2014. The company was founded in 1973 and is headquartered in Los Angeles, California.

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