Financial Survey: Carlyle Group (NASDAQ:CG) and Houlihan Lokey (NYSE:HLI)

Carlyle Group (NASDAQ:CG) and Houlihan Lokey (NYSE:HLI) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, analyst recommendations and profitability.

Insider & Institutional Ownership

55.9% of Carlyle Group shares are owned by institutional investors. Comparatively, 78.1% of Houlihan Lokey shares are owned by institutional investors. 25.4% of Carlyle Group shares are owned by insiders. Comparatively, 22.5% of Houlihan Lokey shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Carlyle Group	9.83%	23.63%	5.79%
Houlihan Lokey	15.78%	19.94%	11.51%

Dividends

Carlyle Group pays an annual dividend of $1.40 per share and has a dividend yield of 3.5%. Houlihan Lokey pays an annual dividend of $2.80 per share and has a dividend yield of 2.0%. Carlyle Group pays out 148.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Houlihan Lokey pays out 47.0% of its earnings in the form of a dividend. Carlyle Group has raised its dividend for 4 consecutive years and Houlihan Lokey has raised its dividend for 9 consecutive years.

Valuation & Earnings

This table compares Carlyle Group and Houlihan Lokey”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carlyle Group	$4.78 billion	2.94	$808.70 million	$0.94	42.31
Houlihan Lokey	$2.62 billion	3.79	$425.70 million	$5.96	23.97

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

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carlyle Group	1	9	7	0	2.35
Houlihan Lokey	0	5	7	0	2.58

Carlyle Group currently has a consensus price target of $50.21, indicating a potential upside of 26.26%. Houlihan Lokey has a consensus price target of $160.44, indicating a potential upside of 12.29%. Given Carlyle Group’s higher probable upside, analysts clearly believe Carlyle Group is more favorable than Houlihan Lokey.

Risk and Volatility

Carlyle Group has a beta of 1.84, indicating that its share price is 84% more volatile than the S&P 500. Comparatively, Houlihan Lokey has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500.

About Carlyle Group

The Carlyle Group Inc. is a global alternative asset manager that invests on behalf of institutional and individual clients. Its business includes private equity, credit and investment solutions, including portfolios of private equity funds and related investments. Founded in Washington, D.C., in 1987, Carlyle has grown into an international firm with investment activities and offices across North America, Europe and Asia, among other regions. Its strategies span a range of industries and markets, and it works with businesses at different stages of development.

About Houlihan Lokey

Houlihan Lokey, Inc. is a global investment bank headquartered in Los Angeles. Founded in 1972, the firm provides financial advice and related services to corporations, financial sponsors, governments and other organizations. The company’s main businesses include corporate finance, financial restructuring and financial and valuation advisory. Its services include advising on mergers and acquisitions, debt and equity financing, restructuring transactions, and business and asset valuations. Houlihan Lokey serves clients across the Americas, Europe, the Middle East and Asia-Pacific through an international office network.