HLI) And The Rest Of The Investment Banking & Brokerage Stocks
As the Q4 earnings season wraps, let’s dig into this quarter’s best and worst performers in the investment banking & brokerage industry, including 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 16 investment banking & brokerage stocks we track reported a very strong Q4. As a group, revenues beat analysts’ consensus estimates by 5.9% while next quarter’s revenue guidance was in line.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 16.4% since the latest earnings results.
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 $717.1 million, up 13% year on year. This print exceeded analysts’ expectations by 2.7%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and a decent beat of analysts’ revenue estimates.
“We are pleased with our results for the quarter and our performance year-to-date. We continue to benefit from improving investor sentiment and acceleration in the private equity markets. Most importantly, we continue to broaden and deepen our bench of exceptional talent around the world, most recently with our two transactions in Europe,” stated Scott Adelson, Chief Executive Officer of Houlihan Lokey.
Houlihan Lokey Total Revenue
The stock is down 23% since reporting and currently trades at $138.92.
Founded in 2007 by veteran banker Ken Moelis during the lead-up to the financial crisis, Moelis & Company (NYSE:MC) is an independent investment bank that provides strategic and financial advisory services to corporations, financial sponsors, governments, and sovereign wealth funds.
Moelis reported revenues of $487.9 million, up 11.2% year on year, outperforming analysts’ expectations by 10%. The business had an incredible quarter with a beat of analysts’ EPS and revenue estimates.
Moelis Total Revenue
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 23.9% since reporting. It currently trades at $53.98.
Tracing its roots back to 1945 and named after founder Bernard Gerald Cantor, BGC Group (NASDAQ:BGC) operates a global brokerage and financial technology platform that facilitates trading across fixed income, foreign exchange, equities, energy, and commodities markets.
BGC reported revenues of $723.3 million, up 32% year on year, falling short of analysts’ expectations by 3.7%. It was a slower quarter as it posted a miss of analysts’ revenue estimates.
BGC delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 10.2% since the results and currently trades at $9.60.
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.
Goldman Sachs reported revenues of $13.45 billion, down 3% year on year. This print surpassed analysts’ expectations by 0.5%. Overall, it was a very strong quarter as it also produced a beat of analysts’ EPS estimates and a narrow beat of analysts’ revenue estimates.
Goldman Sachs had the slowest revenue growth among its peers. The stock is down 12.9% since reporting and currently trades at $812.61.
Founded in 2006 by veteran investment bankers Joseph Perella and Peter Weinberg during a wave of boutique advisory firm launches, Perella Weinberg Partners (NASDAQ:PWP) is a global independent advisory firm that provides strategic and financial advice to corporations, financial sponsors, and government institutions.
Perella Weinberg reported revenues of $219.2 million, down 2.9% year on year. This result topped analysts’ expectations by 27.7%. It was an incredible quarter as it also recorded a beat of analysts’ EPS estimates and a solid beat of analysts’ revenue estimates.
Perella Weinberg achieved the biggest analyst estimates beat among its peers. The stock is down 19.6% since reporting and currently trades at $17.31.
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