HLI is now overvalued and could go down -34%

Based on our analysis, Houlihan Lokey has received an overvalued rating of 1 out of 5 stars, primarily due to several key financial ratios that indicate potential concerns relative to its sector peers. The company's Price-to-Earnings (PE) Ratio stands at 34.00, significantly higher than the sector average of 12.95. This elevated PE ratio suggests that investors may be paying a premium for each dollar of earnings, which could imply overvaluation given the lower growth expectations in the sector. Furthermore, the Price-to-Book (PB) Ratio for Houlihan Lokey is 5.21, contrasting sharply with the sector average of 1.13. A high PB ratio indicates that the stock is priced much higher than its book value, raising questions about whether the premium is justified based on the company's tangible assets. In terms of profitability, Houlihan Lokey's Net Profit Margin is at 16.73, which, while respectable, falls short of the sector's 18.33. This margin indicates the percentage of revenue that remains as profit after all expenses, suggesting that the company is less efficient at converting revenue into profit compared to its peers. Additionally, the Dividend Yield is 1.22, which is below the sector average of 3.06. A lower dividend yield may signal reduced returns for income-focused investors, further supporting the argument of overvaluation. Overall, these financial ratios indicate that Houlihan Lokey may not be providing sufficient value relative to its price, leading to its current overvalued rating. This is not a comprehensive overview of our valuation, and should not be viewed as financial advice. Always do your own research before considering an investment.