Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Houlihan Lokey (NYSE:HLI) and its peers.
Investment banks and brokerages facilitate capital raises, mergers and acquisitions, and securities trading. The sector benefits from corporate activity during economic expansion, increased retail trading participation, and advisory opportunities in emerging sectors. Headwinds include economic cycle vulnerability affecting deal flow, compressed trading commissions due to electronic platforms, and regulatory capital requirements constraining certain higher-risk activities.
The 15 investment banking & brokerage stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.5% while next quarter’s revenue guidance was 1.1% below.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Weakest Q2: Houlihan Lokey (NYSE:HLI)
Founded in 1972 and known for its expertise in complex financial situations, Houlihan Lokey (NYSE:HLI) is a global investment bank specializing in mergers and acquisitions, capital markets, financial restructurings, and valuation advisory services.
Houlihan Lokey reported revenues of $511 million, down 15.6% year on year. This print fell short of analysts’ expectations by 16.3%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ EBITDA and EPS estimates.
“Our first quarter results reflected ongoing headwinds in our Corporate Finance business which started last quarter, including instability in the Middle East and disruptions in the technology sector, specifically in software. Given the general health of the economy and strong public market valuations, we believe these headwinds are temporary in nature and do not represent a cyclical downturn. We continue to see strong support for improved performance for the balance of the year, but it is difficult to tell when the current headwinds will subside,” stated Scott Adelson, Chief Executive Officer of Houlihan Lokey.
Houlihan Lokey delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. The market seems disappointed with the results as the stock is down 7.4% since reporting and currently trades at $128.82.
Read our full report on Houlihan Lokey here, it’s free.
Best Q2: Goldman Sachs (NYSE:GS)
Founded in 1869 as a small commercial paper business in New York City, Goldman Sachs (NYSE:GS) is a global financial institution that provides investment banking, securities, asset management, and consumer banking services to corporations, governments, and individuals.
