Is Houlihan Lokey (HLI) a Solid Growth Stock? 3 Reasons to Think "Yes"

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates can be challenging due to inherent volatility and risks [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - Houlihan Lokey (HLI) is currently highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth being particularly desirable [4] - Houlihan Lokey has a historical EPS growth rate of 7.4%, but projected EPS growth for this year is 28.9%, significantly surpassing the industry average of 13.7% [5] Group 3: Asset Utilization - The asset utilization ratio, or sales-to-total-assets (S/TA) ratio, is an important metric for assessing efficiency in generating sales [6] - Houlihan Lokey's S/TA ratio is 0.69, indicating it generates $0.69 in sales for every dollar in assets, compared to the industry average of 0.22 [7] - The company is also expected to achieve a sales growth of 19.6% this year, while the industry average is 0% [7] Group 4: Earnings Estimate Revisions - Trends in earnings estimate revisions are crucial, with positive revisions correlating strongly with stock price movements [8] - The current-year earnings estimates for Houlihan Lokey have increased by 2.7% over the past month, indicating a positive trend [8] Group 5: Overall Assessment - Houlihan Lokey has achieved a Zacks Rank of 2 and a Growth Score of A, suggesting it is a potential outperformer and a solid choice for growth investors [9]