Houlihan Lokey (NYSE: HLI) and FBR & Co (NASDAQ:FBRC) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, earnings, risk, analyst recommendations, valuation and institutional ownership.
Institutional & Insider Ownership
32.7% of Houlihan Lokey shares are owned by institutional investors. Comparatively, 72.4% of FBR & Co shares are owned by institutional investors. 69.7% of Houlihan Lokey shares are owned by insiders. Comparatively, 13.9% of FBR & Co shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
This table compares Houlihan Lokey and FBR & Co’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|FBR & Co||3.49%||4.34%||0.49%|
Houlihan Lokey pays an annual dividend of $0.80 per share and has a dividend yield of 2.3%. FBR & Co pays an annual dividend of $0.80 per share and has a dividend yield of 4.6%. Houlihan Lokey pays out 41.7% of its earnings in the form of a dividend. FBR & Co pays out -8.9% 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. FBR & Co is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of current recommendations and price targets for Houlihan Lokey and FBR & Co, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|FBR & Co||0||1||0||0||2.00|
Houlihan Lokey currently has a consensus price target of $38.00, indicating a potential upside of 6.92%. Given Houlihan Lokey’s stronger consensus rating and higher probable upside, analysts plainly believe Houlihan Lokey is more favorable than FBR & Co.
Valuation & Earnings
This table compares Houlihan Lokey and FBR & Co’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Houlihan Lokey||$907.54 million||0.97||$47.68 million||$1.92||18.51|
|FBR & Co||N/A||N/A||N/A||($9.00)||-1.95|
Houlihan Lokey has higher revenue and earnings than FBR & Co. FBR & Co is trading at a lower price-to-earnings ratio than Houlihan Lokey, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Houlihan Lokey has a beta of 0.31, meaning that its stock price is 69% less volatile than the S&P 500. Comparatively, FBR & Co has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500.
Houlihan Lokey beats FBR & Co on 9 of the 13 factors compared between the two stocks.
Houlihan Lokey Company Profile
Houlihan Lokey, Inc. is a global independent investment bank that focuses on mergers and acquisitions (M&A), financings, financial restructurings and financial advisory services. The Company operates through three segments: Corporate Finance, Financial Restructuring and Financial Advisory Services. The Company serves a set of clients across the world, including corporations, financial sponsors and government agencies. The Company provides financial professionals with an integrated platform that enables them to deliver advice to its clients. The Company also offers intellectual property advisory services. The Corporate Finance activities include two categories: M&A and capital markets advisory. The Financial Advisory Services segment includes financial opinions, and a range of valuation and financial consulting services in the United States. The Financial Restructuring segment provides advice to debtors and creditors in connection with recapitalization/deleveraging transactions.
FBR & Co Company Profile
FBR & Co. is an investment banking and institutional brokerage company. The Company focuses on the equity capital markets. The Company operates through two segments: capital markets, which includes investment banking, institutional brokerage and research, and principal investing. Through its broker-dealer operating subsidiaries, the Company focuses its business on providing: capital raising services, including underwriting and placement of public and private equity, equity-linked and debt securities; financial advisory services, including merger and acquisition (M&A) advisory, restructuring, liability management, recapitalization and strategic alternative analysis; institutional sales and trading services focused on equities, equity-linked securities, listed options, high-yield bonds, senior debt and bank loans, as well as securities lending activities, and differentiated securities research.
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