Critical Analysis: Houlihan Lokey (NYSE:HLI) & Oportun Financial (NASDAQ:OPRT)

Houlihan Lokey (NYSE:HLI) and Oportun Financial (NASDAQ:OPRT) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, risk, profitability, institutional ownership, earnings and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Houlihan Lokey	16.46%	23.75%	14.21%
Oportun Financial	3.19%	17.61%	2.03%

Analyst Recommendations

This is a summary of recent recommendations for Houlihan Lokey and Oportun Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Houlihan Lokey	0	5	4	1	2.60
Oportun Financial	2	3	2	0	2.00

Houlihan Lokey currently has a consensus price target of $212.43, indicating a potential upside of 22.28%. Oportun Financial has a consensus price target of $8.67, indicating a potential upside of 85.58%. Given Oportun Financial’s higher probable upside, analysts clearly believe Oportun Financial is more favorable than Houlihan Lokey.

Risk & Volatility

Houlihan Lokey has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500. Comparatively, Oportun Financial has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500.

Valuation and Earnings

This table compares Houlihan Lokey and Oportun Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Houlihan Lokey	$2.57 billion	4.74	$399.71 million	$6.20	28.02
Oportun Financial	$408.82 million	0.50	-$78.68 million	$0.66	7.08

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

Insider and Institutional Ownership

78.1% of Houlihan Lokey shares are owned by institutional investors. Comparatively, 82.7% of Oportun Financial shares are owned by institutional investors. 22.8% of Houlihan Lokey shares are owned by company insiders. Comparatively, 9.3% of Oportun Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Houlihan Lokey beats Oportun Financial on 12 of the 15 factors compared between the two stocks.

About Houlihan Lokey

Houlihan Lokey, Inc., an investment banking company, provides merger and acquisition (M&A), capital market, financial restructuring, and financial and valuation advisory services worldwide. It operates in three segments: Corporate Finance, Financial Restructuring, and Financial and Valuation Advisory. The Corporate Finance segment offers general financial advisory services; and advises public and private institutions on buy-side and sell-side transactions, leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, as well as advise financial sponsors on various transactions. The Financial Restructuring segment advises debtors, creditors, and other parties-in-interest related to recapitalization/deleveraging transactions. It also provides a range of advisory services, including structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. The Financial and Valuation Advisory segment offers valuations of various assets, such as companies, illiquid debt and equity securities, and intellectual property. It also provides fairness opinions in connection with M&A and other transactions, solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions. In addition, this segment offers dispute resolution services. It serves corporations, financial sponsors, and government agencies. The company was incorporated in 1972 and is headquartered in Los Angeles, California.

About Oportun Financial

Oportun Financial Corporation provides financial services. The company offers personal loans and credit cards. It serves customers through online and over the phone, as well as through retail and Lending as a Service partner locations. The company was founded in 2005 and is headquartered in San Carlos, California.