Head-To-Head Analysis: WisdomTree (NYSE:WT) & Houlihan Lokey (NYSE:HLI)

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

Risk & Volatility

WisdomTree has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500. Comparatively, Houlihan Lokey has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations for WisdomTree and Houlihan Lokey, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
WisdomTree	0	3	4	0	2.57
Houlihan Lokey	0	2	3	0	2.60

WisdomTree presently has a consensus target price of $13.15, indicating a potential downside of 3.49%. Houlihan Lokey has a consensus target price of $206.40, indicating a potential upside of 3.51%. Given Houlihan Lokey’s stronger consensus rating and higher probable upside, analysts clearly believe Houlihan Lokey is more favorable than WisdomTree.

Dividends

WisdomTree pays an annual dividend of $0.12 per share and has a dividend yield of 0.9%. Houlihan Lokey pays an annual dividend of $2.40 per share and has a dividend yield of 1.2%. WisdomTree pays out 30.8% of its earnings in the form of a dividend. Houlihan Lokey pays out 40.4% 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 9 consecutive years. Houlihan Lokey is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

78.6% of WisdomTree shares are owned by institutional investors. Comparatively, 78.1% of Houlihan Lokey shares are owned by institutional investors. 9.3% of WisdomTree shares are owned by company insiders. Comparatively, 22.8% of Houlihan Lokey shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares WisdomTree and Houlihan Lokey”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
WisdomTree	$427.74 million	4.69	$66.69 million	$0.39	34.94
Houlihan Lokey	$2.39 billion	5.87	$399.71 million	$5.94	33.57

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
WisdomTree	16.25%	25.17%	9.94%
Houlihan Lokey	16.46%	23.75%	14.21%

Summary

Houlihan Lokey beats WisdomTree on 11 of the 17 factors compared between the two stocks.

About WisdomTree

WisdomTree, Inc., through its subsidiaries, operates as an exchange-traded funds (ETFs) sponsor and asset manager. It offers ETFs in equities, currency, fixed income, and alternatives asset classes. The company also licenses its indexes to third parties for proprietary products, as well as offers a platform to promote the use of WisdomTree ETFs in 401(k) plans. It develops index using its fundamentally weighted index methodology. In addition, the company provides investment advisory services. The company was founded in 1985 and is based in New York, New York.

About Houlihan Lokey

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 advise financial sponsors on various transactions. 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, solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions. In addition, this segment offers dispute resolution services. It serves corporations, financial sponsors, and government agencies. The company was incorporated in 1972 and is headquartered in Los Angeles, California.