GET DAILY SIGNALSHoulihan Lokey (HLI) Reports Revenue Growth in Fiscal Second Quarter
Key Takeaways
- Houlihan Lokey reported second quarter fiscal 2027 results on October 28, 2026, for the quarter ended September 30, 2026.
- Revenue rose to $692 million, up roughly 5% from $659 million a year earlier and ahead of the approximately $626 million consensus estimate.
- Net income was $110 million, essentially flat versus $111 million in the year-ago quarter, marking a clear sequential rebound from the prior quarter's miss.
- The results followed a difficult fiscal first quarter, when revenue of $511 million and adjusted earnings per share (EPS) of $1.35 fell well short of Wall Street's expectations.
- Investors focused on management's commentary around the mergers and acquisitions (M&A) pipeline, restructuring demand, and fee conversion trends.
- The company maintained its $0.70 per-share quarterly dividend.
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Earnings Context and Why It Matters
Houlihan Lokey is one of the world's leading independent investment banks, consistently ranked among the top global advisors by transaction count. Because the firm earns advisory fees tied directly to deal activity, its quarterly results serve as a real-time barometer of corporate M&A, capital markets, and restructuring conditions. The second quarter carried extra weight after a disappointing fiscal first quarter, when revenue fell about 16% year over year and both revenue and EPS missed consensus. With shares trading well below their 52-week high and global deal volumes under pressure, investors were looking for evidence that fee generation had stabilized and that the firm's diversified platform could regain momentum. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Reported Results
Houlihan Lokey reported revenue of $692 million for the second quarter of fiscal 2027, up from $659 million in the prior-year period and ahead of the roughly $626 million Wall Street consensus. The result represented a meaningful sequential improvement from the fiscal first quarter's $511 million, reflecting a partial recovery in advisory fee generation.
Net income came in at $110 million, essentially flat versus $111 million a year earlier and a notable rebound from the $78 million reported in the prior quarter. Operating income was $154 million, compared with $151 million in the year-ago period.
On a per-share basis, diluted EPS rebounded sharply from the fiscal first quarter's $1.35 adjusted figure, which had missed the $1.64 consensus. Heading into the report, analysts had modeled roughly $1.63 in adjusted EPS, though the company's adjusted results include add-backs for acquisition-related amortization and other non-recurring items. Management's discussion centered on fee events across its Corporate Finance, Financial Restructuring, and Financial and Valuation Advisory segments, as well as the strength of its new-business pipeline. From what I see, the sequential rebound points to better fee conversion in the period.
Market Reaction and Investor Sentiment
Investor sentiment entering the quarter was cautious. HLI shares had declined from a 52-week high above $200 to the low-$130s as global M&A activity cooled, and the prior quarter's miss had raised concerns about whether weakening deal flow was beginning to weigh on fee generation and conversion rates. Analysts broadly maintained a constructive longer-term view, with a "Moderate Buy" consensus and an average price target near $155, but near-term conviction was limited, with EPS estimates holding essentially flat in the weeks leading up to the report. The second quarter's return to year-over-year revenue growth and stable net income was viewed as an early sign of stabilization, though the market's focus remained on whether the improved momentum could be sustained into the back half of the fiscal year.
Forward Outlook and Key Factors to Monitor
Looking ahead, investors will be watching several signals closely. First, the durability of the M&A recovery is paramount. Global deal volumes softened in recent quarters, and whether announced transactions convert into completed fee events will determine revenue trajectory over the next several quarters.
Second, management's commentary on the pipeline and backlog across Corporate Finance will be critical. A strengthening advisory pipeline, combined with recovering private-equity and sponsor activity, would support the view that the firm's market-leading position by deal count can translate into revenue resilience.
Third, the Financial Restructuring segment remains a potential offset. If corporate distress accelerates, restructuring and liability-management mandates could provide a counterweight to any slowdown in traditional M&A work.
Finally, investors should monitor margin and cost trends, particularly the compensation ratio, which is a key profitability lever for advisory firms. The company's ability to balance hiring and retention against near-term revenue fluctuations will shape profitability as the fiscal year progresses. I’m watching this closely as the next few quarters unfold.
Using Tickeron’s AI Tools for Earnings Analysis
In my view, tools like Tickeron’s AI Screener have become a regular part of how I review quarterly results. It helps filter for comparable firms in the financial services space based on technical patterns, fundamentals, and AI signals, giving additional context to how HLI stacks up against peers. The platform’s customizable scans make it easier to identify trends in advisory and restructuring names without manually sorting through dozens of reports. This kind of insight supports a more disciplined approach to following names like this one.
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
Momentum Indicator for HLI turns positive, indicating new upward trend
HLI saw its Momentum Indicator move above the 0 level on October 15, 2026. This is an indication that the stock could be shifting in to a new upward move. Traders may want to consider buying the stock or buying call options. Tickeron's A.I.dvisor looked at 82 similar instances where the indicator turned positive. In 58 of the 82 cases, the stock moved higher in the following days. The odds of a move higher are at 71%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Moving Average Convergence Divergence (MACD) for HLI just turned positive on October 12, 2026. Looking at past instances where HLI's MACD turned positive, the stock continued to rise in 24 of 39 cases over the following month. The odds of a continued upward trend are 62%.
HLI moved above its 50-day moving average on October 22, 2026 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for HLI crossed bullishly above the 50-day moving average on October 28, 2026. This indicates that the trend has shifted higher and could be considered a buy signal. In 10 of 17 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 59%.
Following a +4.70% 3-day Advance, the price is estimated to grow further. Considering data from situations where HLI advanced for three days, in 202 of 356 cases, the price rose further within the following month. The odds of a continued upward trend are 57%.
Bearish Trend Analysis
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 4 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where HLI declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 62%.
HLI broke above its upper Bollinger Band on October 28, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Aroon Indicator for HLI entered a downward trend on October 16, 2026. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron SMR rating for this company is 49 (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is 60 (best 1 - 100 worst), indicating steady price growth. HLI’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 60 (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 87, placing this stock slightly better than average.
The Tickeron Valuation Rating of 80 (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (4.258) is normal, around the industry mean (3.583). P/E Ratio (22.521) is within average values for comparable stocks, (8.519). Projected Growth (PEG Ratio) (0.210) is also within normal values, averaging (0.809). Dividend Yield (0.020) settles around the average of (7.168) among similar stocks. P/S Ratio (3.517) is also within normal values, averaging (16.763).
The Tickeron PE Growth Rating for this company is 80 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Seasonality Score of 85 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
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