Should You Buy or Hold Houlihan Lokey Stock Before Q3 Earnings?

Earnings Release and Estimates - Houlihan Lokey is scheduled to release fiscal Q3 2025 results on Jan 28, 2025, with a Zacks Consensus Estimate of $1.51 EPS and $592.2 billion in revenues [1] - The Q3 2025 EPS estimate indicates 23.8% YoY growth, while revenue estimates suggest 15.9% YoY growth [2] - For fiscal 2025, the Zacks Consensus Estimate for revenues is $2.3 billion, implying 19% YoY growth, and EPS is $5.74, implying 27.8% YoY growth [3] Earnings Performance and Trends - The company's bottom line beat estimates in three of the trailing four quarters, with an average surprise of 6.6% [4] - The Earnings ESP for Q3 2025 is -3.97%, with the Most Accurate Estimate of $1.45 lower than the Zacks Consensus Estimate of $1.51 [7] - HLI currently carries a Zacks Rank of 3 [7] Business Segment Performance - The top line is likely to benefit from improved fee revenues due to enhanced advisory services [8] - The Financial Restructuring segment is expected to drive overall revenues, benefiting from opportunities in large-cap and middle markets [9] - The Corporate Finance segment is expected to benefit from improving M&A sentiment and the integration of the Triago acquisition [10] - The Financial and Valuation Advisory segment is expected to benefit from non-cyclical services like portfolio valuation and a rebounding M&A market [10] Operating Expenses and Margins - Elevated operating expenses, including higher travel, meals, entertainment, rent, professional fees, and IT costs, are likely to affect margins [11] Stock Performance - HLI's stock has surged 51.9% in the past year, outperforming the industry's growth of 24.6% and the S&P 500's gain of 25.5% [12] - Peer companies like Community Financial System and Moody's Corporation have gained 33.2% and 24.4%, respectively, over the same period [12] Conclusion - Growth in key business segments and recent acquisitions continue to drive Houlihan Lokey's growth [15] - Current shareholders might consider holding their positions, while potential investors may wait for a more favorable entry point [15]