Abstract
Houlihan Lokey will report fiscal results on January 28, 2026 Post Market, and this preview summarizes last quarter’s performance, current-quarter forecasts on revenue, margins, and adjusted EPS, as well as segment dynamics and prevailing analyst opinions for context.Market Forecast
The current-quarter outlook embedded in Houlihan Lokey’s guidance framework indicates estimated revenue of $701.77 million with an estimated year-over-year growth of 16.53%, estimated EBIT of $183.15 million with estimated year-over-year growth of 26.41%, and estimated adjusted EPS of $1.86 with estimated year-over-year growth of 23.05%. Margin-wise, consensus implies continued operating leverage; while explicit gross profit margin and net profit margin forecasts are not formally provided, the company’s model historically tracks high gross margins due to its advisory-led mix.The main business is expected to be driven by Corporate Finance, with anticipated resilience in Financial Restructuring and steadier contribution from Financial and Valuation Advisory. The most promising segment in the near term is Corporate Finance, supported by improved M&A execution pipelines and closing activity; revenue in the last quarter for Corporate Finance was $438.66 million, and momentum is projected to continue with low-teens to high-teens year-over-year growth depending on deal timing.
Last Quarter Review
Houlihan Lokey delivered last quarter revenue of $659.45 million, a gross profit margin of 95.17%, GAAP net profit attributable to the parent company of $112.00 million, a net profit margin of 16.95%, and adjusted EPS of $1.84, with revenue and EPS growing 14.70% and 26.03% year over year, respectively. Quarter on quarter, net profit increased by 14.61%, reflecting improved operating leverage as utilization and fee productivity recovered.A notable highlight was the beat versus internal tracking and external estimates on both revenue and EPS, underpinned by robust close rates in Corporate Finance and improved fee rates. By business line, Corporate Finance generated $438.66 million, Financial Restructuring contributed $133.80 million, and Financial and Valuation Advisory delivered $86.99 million; the mix skew toward Corporate Finance helped lift margins and profit conversion.
Current Quarter Outlook (with major analytical insights)
Main Business: Corporate Finance (M&A and Capital Markets Advisory)
Corporate Finance remains the central earnings engine, benefiting from the release of pent-up M&A demand, stabilizing financing markets, and the desire of corporates and sponsors to transact ahead of potential rate path shifts. Engagement backlogs and mandates that accumulated through the prior year have started to convert into signed and closed deals, which historically deliver the fee recognition that drives revenue and operating leverage. Given the company’s fee structure and win rates, even modest improvements in deal value and completion rates can translate into above-trend EPS growth, consistent with the estimated EPS of $1.86 and EBIT of $183.15 million for the current quarter.The quality of announced deal pipelines alongside stronger sponsor activity suggests a constructive setup for calendar early 2026 closings. While completion risk always exists, the breadth across industries and geographies typically mitigates single-deal dependency. With last quarter’s Corporate Finance revenue at $438.66 million and the current-quarter revenue estimate at $701.77 million for the firm overall, the base case assumes Corporate Finance will account for the majority of incremental revenue, sustaining a high gross margin profile and helping preserve a mid-to-high teens net margin.
Deal size mix is a key swing factor. Larger-cap transactions amplify revenue but can introduce timing variance if closing schedules slip. The firm’s diversified sector coverage, combined with sponsor relationships, provides optionality to backfill any slippage with middle-market closes, a dynamic that has supported more stable quarterly revenue relative to peers during volatile periods.
Most Promising Business: Financial Restructuring
Financial Restructuring offers counter-cyclical support and remains a structural growth pillar as higher-for-longer financing costs and selective credit risk continue to pressure weaker balance sheets. Even with sequential normalization from prior peaks, default and distress rates across select industries could maintain a healthy advisory environment. This creates a durable base of engagements, which, while smaller in absolute dollars than Corporate Finance, contributes to revenue visibility through retainers and milestone fees.With $133.80 million of last-quarter revenue, Financial Restructuring is positioned to contribute steady results this quarter as well. If macro volatility were to re-accelerate or credit spreads widen, the segment could provide incremental upside to firmwide revenue and margin resilience, partially offsetting any M&A completion delays. The interplay between restructuring and M&A cycles tends to balance the aggregate mix, supporting steadier firmwide profitability through cycles.
In addition, restructuring activity often catalyzes follow-on M&A or capital solutions as reorganized entities seek strategic outcomes, creating cross-sell opportunities with Corporate Finance and supporting the revenue synergies reflected in the elevated firmwide margin profile. Given the current-quarter revenue estimate of $701.77 million, a reasonable base case embeds stable-to-modest growth in restructuring, with upside optionality if credit markets tighten.
Key Stock Price Swing Factor: Close Rates and Fee Mix
The most influential near-term driver for the stock is whether sign-to-close conversion and fee mix sustain the prior quarter’s improvement. A higher proportion of success fees relative to retainers augments revenue recognition and lifts near-term EBIT margin, given the largely fixed compensation and platform costs. The guidance-like estimates imply a margin setup consistent with continued fee conversion, which would support EPS delivery of $1.86.A secondary swing factor is expense discipline, particularly compensation ratio and investment in banker headcount. The firm’s ability to capture operating leverage without overextending fixed costs can widen EBIT margin beyond the estimated $183.15 million. Conversely, if management prioritizes headcount expansion to capture pipeline opportunity, the compensation ratio could tick up, moderating near-term EPS even if revenue lands in line.
Market conditions round out the drivers: spreads, equity indices, and sponsor financing access all influence the pace and quality of closings. If market conditions hold stable or improve through January, conversion could exceed the embedded assumptions in current estimates; if volatility rises, revenue could skew later into the fiscal year, tempering quarterly results without changing the full-year opportunity.
Analyst Opinions
Recent analyst commentary trends toward a constructive stance on Houlihan Lokey’s near-term earnings power, with the ratio of bullish to bearish notes skewing positive. Research previews emphasize accelerating M&A pipelines and resilient restructuring backstops as supportive of the firm’s above-consensus revenue growth profile for the quarter, citing scope for modest upside to the $701.77 million revenue estimate and $1.86 adjusted EPS.Among institutional voices, several analysts highlighted the company’s defensive growth mix within advisory, pointing to the high gross margin profile and stable net margin framework as reasons to expect durable cash conversion. The prevailing view expects that improved deal financing conditions and sponsor activity will sustain double-digit year-over-year growth in revenue and EBIT, aligning with the 16.53% and 26.41% estimated growth rates, respectively. The minority, more cautious opinions point to timing risk around large-cap deal closes and the sensitivity of quarterly results to a handful of sizable transactions; however, these concerns have been increasingly offset by improving completion statistics. On balance, the majority perspective anticipates a positive print relative to internal run-rate assumptions, with attention on fee mix and compensation ratio as the key reads for the rest of the fiscal year.
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