The Goldman Sachs Group (NYSE:GS) & Houlihan Lokey (NYSE:HLI) Financial Review

Houlihan Lokey (NYSE:HLI) and The Goldman Sachs Group (NYSE:GS) are both large-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, earnings, dividends and risk.

Valuation and Earnings

This table compares Houlihan Lokey and The Goldman Sachs Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Houlihan Lokey	$2.62 billion	4.09	$425.70 million	$5.96	26.01
The Goldman Sachs Group	$125.10 billion	2.16	$17.18 billion	$69.55	13.34

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

Dividends

Houlihan Lokey pays an annual dividend of $2.80 per share and has a dividend yield of 1.8%. The Goldman Sachs Group pays an annual dividend of $20.00 per share and has a dividend yield of 2.2%. Houlihan Lokey pays out 47.0% of its earnings in the form of a dividend. The Goldman Sachs Group pays out 28.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Houlihan Lokey has raised its dividend for 9 consecutive years and The Goldman Sachs Group has raised its dividend for 13 consecutive years. The Goldman Sachs Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

78.1% of Houlihan Lokey shares are held by institutional investors. Comparatively, 71.2% of The Goldman Sachs Group shares are held by institutional investors. 22.5% of Houlihan Lokey shares are held by company insiders. Comparatively, 0.6% of The Goldman Sachs Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Houlihan Lokey and The Goldman Sachs Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Houlihan Lokey	15.78%	19.94%	11.51%
The Goldman Sachs Group	15.77%	19.55%	1.08%

Risk & Volatility

Houlihan Lokey has a beta of 0.9, suggesting that its share price is 10% less volatile than the S&P 500. Comparatively, The Goldman Sachs Group has a beta of 1.29, suggesting that its share price is 29% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Houlihan Lokey and The Goldman Sachs Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Houlihan Lokey	0	5	7	0	2.58
The Goldman Sachs Group	1	13	10	1	2.44

Houlihan Lokey currently has a consensus price target of $160.44, indicating a potential upside of 3.51%. The Goldman Sachs Group has a consensus price target of $1,052.04, indicating a potential upside of 13.42%. Given The Goldman Sachs Group’s higher possible upside, analysts clearly believe The Goldman Sachs Group is more favorable than Houlihan Lokey.

Summary

The Goldman Sachs Group beats Houlihan Lokey on 10 of the 18 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 The Goldman Sachs Group

The Goldman Sachs Group, Inc., a financial institution, provides a range of financial services for corporations, financial institutions, governments, and individuals worldwide. It operates through Global Banking & Markets, Asset & Wealth Management, and Platform Solutions segments. The Global Banking & Markets segment provides financial advisory services, including strategic advisory assignments related to mergers and acquisitions, divestitures, corporate defense activities, restructurings, and spin-offs; and relationship lending, and acquisition financing, as well as secured lending, through structured credit and asset-backed lending and involved in financing under securities to resale agreements. This segment also offers client execution activities for cash and derivative instruments; credit and interest rate products; and provision of mortgages, currencies, commodities, and equities related products, as well as underwriting services. The Asset & Wealth Management segment manages assets across various classes, including equity, fixed income, hedge funds, credit funds, private equity, real estate, currencies, and commodities; and provides customized investment advisory solutions, wealth advisory services, personalized financial planning, and private banking services, as well as invests in corporate equity, credit, real estate, and infrastructure assets. The Platform Solutions segment offers credit cards and point-of-sale financing for purchase of goods or services. This segment also provides cash management services, such as deposit-taking and payment solutions for corporate and institutional clients. The Goldman Sachs Group, Inc. was founded in 1869 and is headquartered in New York, New York.